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Can contractor withhold payment for not having workers comp exemption?

The job has been completed. Trying to get paid the guy writes a check it was incorrect. I asked for a correctly written check says we have to go and fix a punch list and we can get paid. Contact him after completing the punch list to get paid then ask for business license and insurance which we provided.Next day contact about getting paid then says Needs workers comp exemption which he should have asked for all of this at start of job. Now is pretty much withholding our payment has been for going on 3 weeks. Now wants to hold .37% of our money because we don't have workers comp exemption. But we don't have any employees.

2 replies

Jul 8, 2020

From the sound of it, the customer is looking for any excuse not to make payment. Informing the customer that the business has no employees and therefore has no need for workers comp coverage might help to move things along. Or, if they're insistent, making things official by becoming registered with the TN Workers' Compensation Exemption Registry could move things along. Still - when a customer keeps making excuses for why they aren't paying you, it might be time to let them know you aren't playing around when it comes to payment. Threatening to pursue a mechanics lien by sending a Notice of Intent to Lien can be effective. A Notice of Intent lets your customer know you mean business, and, when sent to the owner, it lets them know about the dispute as well. Neither the customer nor the owner will want to deal with a lien filing, so that could put pressure on the customer to do the right thing and pay what's owed. Granted, note that lien rights can be limited for subs on residential jobs. Further, threatening to pursue legal action can be effective, too. Levelset discusses that here: Construction Demand Letters – How To Write One That Gets You Paid. As discussed there, threatening legal claims - like breach of contract or under the TN prompt payment laws - could force the customer to pay what's owed. Or, actually pursuing legal claims could be a last-ditch option too, along with sending the debt to collections. If things come to that, consulting with a TN construction lawyer might be a good idea - and so would considering small claims court.

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Jul 8, 2020

Ty very much this helps a lot ???

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