Louisiana Prompt Payment Requirements
- Private Jobs
- Public Jobs
Louisiana law does not specify a deadline for payments from property owners to prime contractors.
Payment to subcontractors in Louisiana is due within 14 days after payment is received by their hiring party.
Payment to material suppliers in Louisiana is due within 14 days after payment is received by their hiring party.
Interest & Fees
On private projects in Louisiana, late payments are subject to a penalty imposed at 0.5% per day, up to a maximum of 15% of payment due. Attorneys' fees may be awarded for collection of amount due. All fees for defense can be awarded to the nonpaying party if the claim was made "without merit."
For Prime Contractors on public projects in Louisiana, progress payments are due according to the contract. Final payment (including retainage) is due 45 days from receipt of "clear lien certificate." For highway projects, progress payments are due 30 days after invoice, and final/retainage payment is due 45 days from substantial completion of the project.
For subcontractors, payment is due within 14 days after payment is received from above.
For suppliers, payment is due within 14 days after payment is received from above.
Interest & Fees
A late payment penalty is imposed at 0.5% per day (but not more than 15% of payment due). Attorneys' fees may be awarded to the prevailing party.
Prompt payment laws are a set of rules that regulate the acceptable amount of time in which payments must be made to contractors and subs. This is to ensure that everyone on a construction project is paid in a timely fashion. These statutes provide a framework for the timing of payments to ensure cash flow and working capital.
Projects Covered by Prompt Payment in Louisiana
The state of Louisiana regulates payment on both private and public construction projects within the state.
La. Rev. Stat. §9:2784 regulates payment on all private construction projects, with the exception of residential projects. Payment on residential projects will be governed by the terms of the construction agreement between the parties.
Payment Deadlines for Private Projects
Louisiana law does not regulate payments between private property owners and prime contractors. Those deadlines and penalties will be governed by the contract. However, once the prime contractor has received any type of payment from the property owner, the prime has 14 consecutive days to make payment to their subcontractors and suppliers. The same 14-day timeline also applies to payments made to sub-subcontractors and suppliers on the following tier.
Penalties for Late Payment on Private Projects
If any payment is late or otherwise wrongfully withheld, the unpaid balance will accrue an interest penalty at a rate of 0.5% per day. However the total amount of interest penalties can’t exceed 15% of the payment due. If the dispute goes to court or arbitration, the subcontractor or supplier may be awarded attorney fees. If however, the claim for non-payment is deeded without merit, the court will award the costs of defense to the non-paying party.
Public projects in Louisiana are also governed by La. Rev. Stat. §9:2784. In addition, two additional laws apply:
- RS §38:2191: Payments under public contracts
- RS §48:251.5: Payments under Department of Transportation contracts
Payment Deadlines for Public Projects
Once a prime contractor has submitted a certified request for payment in accordance with the terms of the contract, the public entity must make payment within 45 days of receipt. As for final payments to the prime contractor, the payment deadline is also 45 days, but counted from the formal, final acceptance of the project.
As for payments to first and second tier subcontractors and suppliers, these all must be made within 14 consecutive days after the contractor or sub received payment.
Penalties for Late Payment on Public Projects
All late or wrongfully withheld payments will be penalized in the same manner as private projects. Interest will accrue at 0.5% a day, which is capped at 15% of the unpaid balance. However, unlike private projects, attorney fees will be awarded to any prevailing party in a claim brought under Louisiana’s prompt payment laws.
Federal construction projects that take place in Louisiana are not subject to the state’s prompt payment laws. Instead, the US Federal Prompt Payment Act applies.