Washington Prompt Payment Guide and FAQs

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Washington Prompt-Payment

Washington Prompt Payment Overview

Washington Prompt Payment Requirements


  • Private Jobs
  • Public Jobs
  • Top Links
NO
DAYS
Prime Contractors

Not specified in state statutes


NO
DAYS
Subcontractors

Not specified in state statutes


NO
DAYS
Suppliers

Not specified in state statutes


NO
Interest & Fees

Not specified in state statutes

30
DAYS
Prime Contractors

For Prime (General) Contractors, payment due within the later of 30 days from invoice or 30 days from receipt of services.


10
DAYS
Subcontractors

For Subcontractors, payment due within 10 days of payment received from above.


10
DAYS
Suppliers

For Suppliers, payment due within 10 days of payment received from above.


1%
/ MONTH
Interest & Fees

Interest at 1% month for prime; interest at statutory rate for subs. Attorneys' fees awarded to 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 Washington

The state of Washington has Prompt Payment statutes that cover only public works projects, found in Wash. Rev. Code §§39.76.010 to 39.76.40, and 39.04.250. These include all construction projects that are commissioned by the state, county, city, town, school district or any other Washington public body.

Deadlines for Payment on Public Projects

The deadline for the public entity to pay the prime contractor on the project is 30 days from either (1) the date the contractor’s invoice was received, or (2) the receipt of the labor or materials; whichever is later. Once the prime contractor receives payment, they are required to pay their subs and suppliers within 10 days.

The public entity and any contractor making payments do have the ability to withhold payments if the performance is unsatisfactory, or if the payment request isn’t in the correct form based on the contract terms. If so, the party withholding payment must notify the party; within 8 days if it’s a public entity, or as soon as practicable for any other party. Once the defective work has been remedied, the public entity must make payment within the same 30-day span, and contractors are required to make payment within 8 days after the work has been remedied.

Penalties for Late Payments on Public Projects

Any payments wrongfully withheld will be subject to interest accruing on the unpaid amount. Late payments from the public entity will accrue interest at a rate of 1% a month, or at least $1 per month. For all other payments, the interest rate is the highest rate of interest permissible under R.C.W. §19.52.025 and is set by the State Treasurer. This rate is published once a month in the Washington State Register, which has been set at 12% a year for some time now. In addition to interest, if the dispute goes to court, the prevailing party will be entitled to reasonable attorney fees.

Washington Prompt Payment Quick Guide

Washington Prompt Payment Frequently Asked Questions

Washington’s prompt payment statutes set forth specific timeframes for when general contractors, subcontractors, suppliers, and others involved with a public construction project must be paid. This page provides an overview of these regulations and addresses frequently asked questions related to the Washington prompt payment laws.

Washington Prompt Payment Private Projects FAQs

Does Washington have prompt payment laws for private projects?

Washington does not have any prompt payment provisions regarding private projects. Therefore, the timing of payments will be governed by the terms of the contract.

Washington Prompt Payment Public Projects FAQs

What types of public projects are subject to Washington’s prompt payment laws?

The Washington prompt payment laws apply to all state and municipal public works projects within the state. The only exceptions are certain types of contracts that fall under the Washington State Public Stadium Authority.

When does payment become due under Washington’s prompt payment laws?

In order for the provisions of Washington’s prompt pay laws to apply, the party requesting payment must be entitled to payment pursuant to the terms of the contract, and must submit a proper invoice.

When is the deadline for payment under Washington’s prompt payment laws?

Public Entity to Prime Contractors

Payments must be made either according to the payment schedule provided in the contract, but no later than 30 days after receipt of a proper invoice or receipt of the goods/services; whichever is later.

Contractors to Subs/Suppliers

Once payment has been received from a higher-tiered party, payments must be made to any subcontractors or suppliers within 10 days.

What if the payment request or invoice is improper or incomplete?

The public entity is required to send a written notice of noncompliance within 8 working days after receipt of the payment request. This should specifically state the reasons all or part of the payment is being withheld and the remedial actions necessary to receive payment. Once the contractor remedies the deficiencies, payment must be made within 30 days.

Are there reasons for which payment may be withheld past the general deadline?

Washington allows payment to be withheld for the following reasons:

• A good faith dispute over the amount owed.

• Unsatisfactory performance.

• Payment requests not in compliance with the contractual requirements (if notice of deficiency of payment request given to party requesting payment).

Can I include prompt payment fees in a Washington payment bond claim?

No. Washington doesn’t allow miscellaneous amounts to be included on the face of public payment bond claims.

What is the best practice for making a demand to a non-paying party to get prompt payment fees?

Sending a Notice of Intent to Make a Bond Claim along with a Prompt Payment Demand Letter is generally the best method for encouraging parties to make payment.

If payment still isn’t forthcoming, a lawsuit may be necessary. For more on this, see: How to Make a Claim under Prompt Payment Laws.

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Washington Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of Washington’s prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. Washington’s specific laws can be found in: Wash. Rev. Code §§ 39.76.011-39.76.040, & 39.04.250, and are reproduced below. Updated as of 2020.

Prompt Payment Statute on Private Projects

Does Washington have Prompt Payment Statute on Private Projects?

Washington does not address prompt payment for private projects in its statutes.

Prompt Payment Statute on Public Projects

§ 39.76.011. Interest on unpaid public contracts - When payment is considered to be made

(1) Except as provided in RCW 39.76.020, every state agency, county, city, town, school district, board, commission, or any other public body shall pay interest at a rate of one percent per month, but at least one dollar per month, on amounts due on written contracts for public works, personal services, goods and services, equipment, and travel, whenever the public body fails to make timely payment.

(2) For purposes of this section, payment shall be timely if:

(a) Except as provided otherwise in this subsection, a check or warrant is mailed or is available on the date specified for the amount specified in the applicable contract documents but not later than thirty days of receipt of a properly completed invoice or receipt of goods or services, whichever is later. If a contract is funded by grant or federal money, the public body shall pay the prime contractor for satisfactory performance within thirty calendar days of the date the public body receives a payment request that complies with the contract or within thirty calendar days of the date the public body actually receives the grant or federal money, whichever is later.

(b) On written contracts for public works, when part or all of a payment is going to be withheld for unsatisfactory performance or if the payment request made does not comply with the requirements of the contract, the public body shall notify the prime contractor in writing within eight working days after receipt of the payment request stating specifically why part or all of the payment is being withheld and what remedial actions must be taken by the prime contractor to receive the withheld amount.

(c) If the notification by the public body required by (b) of this subsection does not comply with the notice contents required under (b) of this subsection, the public body shall pay the interest under subsection (1) of this section from the ninth working day after receipt of the initial payment request until the contractor receives notice that does comply with the notice contents required under (b) of this subsection.

(d) If part or all of a payment is withheld under (b) of this subsection, the public body shall pay the withheld amount within thirty calendar days after the prime contractor satisfactorily completes the remedial actions identified in the notice. If the withheld amount is not paid within the thirty calendar days, the public body shall pay interest under subsection (1) of this section from the thirty-first calendar day until the date paid.

(e)

(i) If the prime contractor on a public works contract, after making a request for payment to the public body but before paying a subcontractor for the subcontractor’s performance covered by the payment request, discovers that part or all of the payment otherwise due to the subcontractor is subject to withholding from the subcontractor under the subcontract for unsatisfactory performance, the prime contractor may withhold the amount as allowed under the subcontract. If the prime contractor withholds an amount under this subsection, the prime contractor shall:

(A) Give the subcontractor notice of the remedial actions that must be taken as soon as practicable after determining the cause for the withholding but before the due date for the subcontractor payment;

(B) Give the contracting officer of the public body a copy of the notice furnished to the subcontractor under (e)(i)(A) of this subsection; and

(C) Pay the subcontractor within eight working days after the subcontractor satisfactorily completes the remedial action identified in the notice.

(ii) If the prime contractor does not comply with the notice and payment requirements of (e)(i) of this subsection, the contractor shall pay the subcontractor interest on the withheld amount from the eighth working day at an interest rate that is equal to the amount set forth in subsection (1) of this section.

(3) For the purposes of this section:

(a) A payment is considered to be made when mailed or personally delivered to the party being paid.

(b) An invoice is considered to be received when it is date-stamped or otherwise marked as delivered. If the invoice is not date-stamped or otherwise marked as delivered, the date of the invoice is considered to be the date when the invoice is received.

§ 39.76.020. Interest on unpaid public contracts - Exceptions

RCW 39.76.011 does not apply to the following:

(1) Interagency or intergovernmental transactions;

(2) Amounts payable to employees or prospective employees of state agencies or local governmental units as reimbursement for expenses;

(3) Belated claims for any time of delinquency after July 31 following the second year of the fiscal biennium;

(4) Claims subject to a good faith dispute, when before the date of timely payment, notice of the dispute is:

(a) Sent by certified mail;

(b) Personally delivered; or

(c) Sent in accordance with procedures in the contract;

(5) Delinquencies due to natural disasters, disruptions in postal or delivery service, work stoppages due to labor disputes, power failures, or any other cause resulting from circumstances clearly beyond the control of the unit of local government or state agency;

(6) Contracts entered before July 26, 1981; and

(7) Payment from any retirement system listed in RCW 41.50.030 and chapter 41.24 RCW.

§ 39.76.030. Penalties by state agencies to be paid from administrative funds

Any state agency required to pay late payment penalties under this chapter shall pay the penalties from funds designated for administrative costs of the agency receiving the public works, personal services, goods and services, equipment, or travel and shall not be paid from funds appropriated for client services.

§ 39.76.040. Interest on unpaid public contracts - Attorney fees

In any action brought to collect interest due under this chapter, the prevailing party is entitled to an award of reasonable attorney fees.

§ 39.04.250. Payments received on account of work performed by subcontractor - Disputed amounts - Remedies

(1) When payment is received by a contractor or subcontractor for work performed on a public work, the contractor or subcontractor shall pay to any subcontractor not later than ten days after the receipt of the payment, amounts allowed the contractor on account of the work performed by the subcontractor, to the extent of each subcontractor’s interest therein.

(2) In the event of a good faith dispute over all or any portion of the amount due on a payment from the state or a municipality to the prime contractor, or from the prime contractor or subcontractor to a subcontractor, then the state or the municipality, or the prime contractor or subcontractor, may withhold no more than one hundred fifty percent of the disputed amount. Those not a party to a dispute are entitled to full and prompt payment of their portion of a draw, progress payment, final payment, or released retainage.

(3) In addition to all other remedies, any person from whom funds have been withheld in violation of this section shall be entitled to receive from the person wrongfully withholding the funds, for every month and portion thereof that payment including retainage is not made, interest at the highest rate allowed under RCW 19.52.025. In any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to costs of suit and reasonable attorneys’ fees.

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