Ohio's Prompt Pay Provisions - A Statute Designed to Help Lower Tier Contractors and Suppliers Get Paid

Ohio's Prompt Pay provisions, codified in Ohio Revised Code 4113.61, affords the lower tier contractor a resource to obtain payment from his contractor. The provisions, if properly followed, exact severe penalties to the contractor if they fail to pay their subs and suppliers within the statutory time limits. In the event the contractor fails to pay his subcontractors or suppliers within 10 days of being paid for the subcontractor's work or for material supplied, the law provides an 18% per annum interest rate on the amount owed, PLUS attorney fees.

In order to succeed in a claim under the prompt payment law, the subcontractor or supplier must:

1. Prove a valid and enforceable contract claim.

2. Prove that an accurate invoice was submitted to the contractor for payment.

3. Prove that the subcontractor or supplier allowed the contractor sufficient time to include the invoice in the contractor's invoice to the owner;

4. Prove that the contractor was paid for the invoice submitted for work or materials set forth in the subcontractor's or supplier's invoice.

5. Prove that the contractor refused to timely pay the subcontractor or supplier an amount equal to the percentage of completion allowed by the owner; and

6. Prove there is no valid reasons for the contractor to withhold any amount necessary to resolve disputed claims involving the work or materials.

If subcontractor or supplier successfully establish these provisions, the contractor is required to pay the subcontractor or supplier interest in the amount of 18% per annum from the 11th day the payment is not made. The law also allows for attorney fees.

As you can see enforcement of these provisions are highly technical. Competent counsel should be retained to enforce these statutory provisions.