Does Prompt Payment legislation apply to design consultants (architects/engineers)?

5 days ago

I have reviewed your prompt payment resources which are extremely informative. Do you have any information on which states prompt payment legislation also applies to design consultants (architects/engineers) and not only contractors.

(note: I am looking for resources on all states – not just Michigan which was selected above)

Senior Legal Associate Levelset

Michigan’s prompt payment statute sets payment timeframes between the public agency in charge of a public works project and their “contractor”. So, who’s considerd a “contractor” will generally dictate who’s protected by the state’s prompt payment laws (and, this is likely true in most states).

By and large, prompt payment laws are intended to protect parties who we generally think of when we hear the word “contractor” in the construction context. However, there’s a chance that, in some circumstances, an architect or engineer might be considered a “contractor” for the purposes of prompt payment legislation in Michigan.

For posterity: Michigan Prompt Payment Guide and FAQs.

Definitions

Note, though, that a “contractor” is defined as “an individual, sole proprietorship, partnership, corporation, or joint venture, that is a party to a construction contract with a public agency.” And, a “construction contract” refers to “a written agreement between a contractor and a public agency for the construction, alteration, demolition, or repair of a facility, other than a contract having a dollar value of less than $30,000.00 or a contract that provides for 3 or fewer payments.

Note also that “Architect or professional engineer” refers to licensed architects and engineers that are “designated by a public agency in a construction contract to recommend progress payments.

So, if an architect or engineer has a contract with a public agency for the construction, alteration, demolition, or repair of a public facility, they may well be considered a “contractor.” And, if they aren’t designated to recommend progress payments, there’s probably be little argument against designation as a contractor.

Bottom line

Traditionally, prompt payment laws are intended to protect general contractors, subcontractors, and other sub-tier project participants. However, based on how terms are defined in Michigan’s prompt payment statute, there’s a chance that an architect or engineer might find protection there.

Other states

Note that prompt payment laws will vary from state to state. And, unfortunately, I’m not able to provide a state-by-state breakdown here. If there are other key states you’re interested in, please feel free to post additional questions here at the Expert Center and we’ll do our best to provide some insight there! I’m glad you’ve found our resources valuable thus far!

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