Massachusetts Prompt Payment Requirements
- Private Jobs
- Public Jobs
On private projects, Massachusetts Prompt Pay law requires property owners to make progress payments to Prime Contractors within 45 days after approval of invoice. The invoice must be approved or denied within 15 days.
Prime Contractors on private projects in Massachusetts must make payments to subcontractors within 45 days after approval of invoice. The invoice must be approved or denied within 22 days.
On private projects, Massachusetts Prompt Pay laws require payments to material suppliers within 45 days of invoice approval. The invoice must be approved or denied within 22 days.
Interest & Fees
If payment is late according to Massachusetts Prompt Payment requirements, the state's general interest statute presumably applies, since this is a contract dispute. The general interest penalty is 12% per year.
On a public project in Massachusetts, prompt payment laws require the public agency to make progress payments to the GC within 15 days of invoice. The deadline is extended to 30 days for payments from the Commonwealth. Final payment to prime contractors is due within 65 days of substantial completion of the project; the retainage payment is due within 30 days from submission of invoice.
On public projects, Massachusetts prompt pay laws require GCs to make progress payments to subcontractors immediately after receipt of payment from the public agency. Final payment is due within 65 days of substantial completion of the particular subcontractor's work. Retainage payments to subcontractors is due 37 days from submission of invoice.
For suppliers in Massachusetts, progress payments are due immediately upon receipt of payment by their hiring party. Final payment is due within 65 days of the supplier's last day of furnishing. Retainage payment is due to suppliers within 37 days from invoice submission.
Interest & Fees
If payment is late on a public project in Massachusetts, the Prompt Pay laws set the interest penalty at the federal rate plus 3%.
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 Massachusetts
Massachusetts has two separate sets of statutes that govern payment on both private and public construction projects.
Private construction projects in Massachusetts are regulated by Mass. Gen. Laws. 149 § 29E. These rules apply to all private projects with an original contract price of $3 million or more, with one exception: MA prompt payment rules don’t apply to residential projects of 4 or fewer.
Payment Deadlines for Private Projects
Once a prime contractor has submitted a payment request on a private construction project, the owner has 15 days to either approve or deny the request. After approval, the owner then has 45 days to make payment to the prime. So Massachusetts private property owners have 60 total days from receipt of the pay request to release payment to the prime contractor.
Private project payments from the GC down the chain follow the same basic formula, except Massachusetts Prompt Pay laws give each party an additional 7 days to approve or deny invoices. So the GC has 22 days to approve or deny a payment request from a subcontractor or supplier. Following invoice approval, the GC has 45 days to submit payment to subs and suppliers.
Payments from subs to their sub-subs or suppliers must be approved within 29 days. If approved, payments must be released within 45 days. And so on down the payment chain.
MA Penalties for Late Payment on Private Projects
There are specific circumstances provided in the statute regarding when payments can be rightfully withheld. However, if none of those circumstances exist, or payment is otherwise late, The private prompt pay statutes does not specifically state an interest rate, but the general judgment interest rate for contract actions is 12% per year (1%/month).
Massachusetts public works projects are regulated by Mass. Gen. Laws 30 §§39F to 39K.
Payment Deadlines for Public Projects
Prompt Pay deadlines for public projects in Massachusetts depend on the type of payment – progress or final – being made and to whom. Progress payments to the prime contractor on a public project are due within 15 days after receipt of a proper request for payment. If the project is contracted by a commonwealth entity, then the time is extended to 30 days. As for final payments to the prime contractor, these payments must be made within 65 days of substantial completion.
Once the prime contractor has received a progress payment, they are required to pay their subcontractors and suppliers immediately upon receipt. Final payments to subcontractors must be made within 65 days of substantial completion of that subcontractor’s work.
MA Penalties for Late Payment on Public Projects
Any payments that are either late or wrongfully withheld on a public construction project in Massachusetts are subject to interest penalties on the unpaid balance. Interest will begin to accrue on the first day payment is past due at a rate equal to the discount rate charged by the Federal Reserve, plus 3% per year. There are no provisions regarding attorney fees.