Prompt payment statutes are laws that require the payment of contractors and subcontractors within a certain period of time, and prescribe interest and penalties for late payments. In some states these laws only apply to public works construction projects that are funded by the government—and sometimes only to public works projects over a certain dollar amount. There is also a federal Prompt Payment Act for federal construction projects.

In New Jersey, prompt payment statutes are designed to ensure that contractors and subcontractors are paid in a timely manner for their work on construction projects. The New Jersey Prompt Payment Act applies to both public and private construction projects. Under this act, once a contractor has performed in accordance with the contract terms and submitted a bill, the owner must pay the contractor within 30 days, unless the contract specifies otherwise. If the owner fails to pay within this period, the contractor is entitled to interest on the unpaid amount. For subcontractors, once the contractor has received payment, they must pay their subcontractors within 10 days, unless otherwise agreed upon. If payment is not made, the subcontractor is also entitled to interest. The interest rate is set at the prime rate plus 1%. These provisions ensure that payments are made promptly and that there are financial consequences for late payments. Additionally, the federal Prompt Payment Act covers federal construction projects, ensuring that contractors and subcontractors working on these projects are paid on time and can claim interest on late payments.