You may not know this but as a subcontractor, you have certain rights to make sure you get paid in a timely manner. It is the Ohio Prompt Payment Act and is codified in the Ohio Revised Code Section 4113.361. If your contractor is giving you the ‘pay you when I get paid’ runaround you have options to make them pay and protect your business cash flow. The Ohio Prompt Payment Act is applicable to both private and public projects and is designed to provide the incentive to contractors to promptly pay subcontractors. The Act provides lower-tier subcontractors and material suppliers with additional statutory claims in the event the general contractor receives payment for their work but unjustifiably refuses to pay the subcontractors/material suppliers.
The subcontractor/material provider must submit an invoice for their services/materials to the general contractor in time to allow the general contractor to include the costs in the application for payment from the customer. If the general contractor receives payment from the customer that contains work performed by the subcontractor/material provider the general contractor MUST pay the subcontractor/material supplier for that work within 10 days of receipt of payment. If only a partial payment is received then the payment to the subcontractor/material provider shall be prorated and paid.
If payment is not made then from the 11th day to payment the general contractor is liable to pay interest to the subcontractor/material provider at 18% in addition to the money already due for work provided. If after 30 days there has been no payment then the Act allows for the subcontractor/material provider to bring civil suit and if won the subcontractor/material provider may recover attorney fees and expenses. Contractors do have a defense if there is a dispute as to workmanship or quality.
As always each case is different and consulting an experienced attorney before taking any action is advised.
Written by Attorney Heather Moseman.
Excerpted from Attorney At Law Magazine, Ohio Edition Vol 5, No 1