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 Washington State, prompt payment statutes are designed to ensure that contractors and subcontractors are paid in a timely manner for their work on construction projects. The Washington State Prompt Payment Act, RCW 39.76, specifically applies to public works projects and dictates that the prime contractor must pay subcontractors for satisfactory performance within 30 days after receiving payment from the public entity. If payment is not made within this timeframe, the subcontractor may be entitled to interest at a rate of one percent per month. For private construction projects, the terms of payment are generally governed by the contract between the parties. Additionally, the federal Prompt Payment Act applies to federal construction projects, requiring federal agencies to pay contractors within a certain period of time and to include payment clauses in their contracts to ensure subcontractors are also paid promptly. Penalties and interest may be imposed for late payments under this federal law.