Ohio Prompt Payment Requirements
- Private Jobs
- Public Jobs
Ohio does not specify a timeframe for payments from the property owner to general contractor.
According to Ohio's Prompt Payment laws, subcontractor payments are due within 10 days after their hiring party receives payment on private construction projects.
Ohio's Prompt Payment laws require payments to material suppliers within 10 days after their hiring party receives payment.
Interest & Fees
Late payments to prime contractors are subject to Ohio's general interest statute at the "federal short-term"
rate. Late payments to subcontractors and suppliers accrue interest at 18% year. The state may also award attorney fees prevailing party in a prompt payment claim.
Ohio requires prompt payment to Prime Contractors within 30 days of invoice on a public project. This timeframe may be modified by contract.
According to Ohio's Prompt Pay laws for public construction projects, subcontractors must receive payment within 10 days after their hiring party receives payment.
On public construction projects in Ohio, material suppliers must receive payment within 10 days after their hiring party receives payment.
Interest & Fees
Prime contractors are entitled to the statutory interest rate for late payments on public construction projects. Subcontractors are entitled to a prompt payment interest rate of 18% per year.
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 Ohio’s Prompt Pay Laws
The state of Ohio’s prompt payment provisions are split into two sections, covering both private and public projects. These statutes govern the timing of all payments on construction projects, and impose penalties for late payment in the form of interest.
Payments for Ohio private construction projects are regulated by Ohio Rev. Code §4113.61: Time limitations for payments to subcontractors and materialmen.
Payment Deadlines for Private Projects
The Ohio prompt payment provisions on private projects do not govern payments from the property owner to the prime contractor. However, as of May 2020 the Ohio Legislature is considering an amendment that would set a 35-day deadline for payments from owner to prime. Currently, these payments should be made according to the terms of the contract between the parties.
However, once the prime has received payment from the owner, they must pass payment down to their subcontractors and suppliers within 10 days of payment. The same 10-day turnaround period applies to payments from 2nd-tier parties to other lower-tiered project participants.
Penalties for Late Payment on Private Projects
If payments to subcontractors or other lower-tiered project participants is either late or wrongfully withheld, interest penalties will accrue at a rate of 18% per year (1.5% per month). Additionally, Ohio courts may award attorney fees if they deem them “equitable.”
All payments on public construction projects in Ohio are regulated by Ohio. Rev. Code §126.30: Interest on late payments for goods & services.
Payment Deadlines for Public Projects
Once the public entity has received a proper request for payment from the prime contractor, Ohio’s prompt pay law requires payment within 30 days of receipt, unless the contract states otherwise. As far as all other payments on public works projects the same deadlines as private projects applies. Payments must be made within 10 days of the higher-tiered party’s receipt of payment.
Penalties for Late Payment on Public Projects
Any late or wrongfully withheld payments will be subject to interest penalties on the unpaid balance. Late payments to the prime contractor will accrue interest at the “federal short-term rate,” unless the contract states otherwise. The interest rate for late payments to all other payments will be the same as private projects, 18% per year (1.5% per month).