We helped negotiate, draft and pass Ohio’s Prompt Payment Act (R.C. 4113.61) in the early 1990s. It became a model for many other states. The Act provides that once a contractor gets paid for a subcontractor’s (or supplier’s) work, he must pay the subcontractor within ten (10) calendar days after receipt. If he fails to do so, he is liable for 18% interest and legal fees.
Shortly after the Act became law we tried the first Prompt Pay Act case, and the jury found for our client for the full sum owed, together with interest and attorney’s fees. Word traveled fast and several other cases were settled shortly thereafter, as many decided that the risk of high interest and legal fees to the prevailing party was too much risk to take.
This summer we had an opportunity to try a prompt payment case to a Delaware County jury on behalf of the daughter of the client who we represented in the very first prompt pay victory in Ohio. Fortunately history repeated itself – almost 25 years later – as the jury returned a verdict for our client and awarded 18% interest. Judge Krueger subsequently awarded us 100% of our legal fees incurred in the dispute.
So the message remains clear. The Prompt Payment Act means what it says and any contractor who disregards its requirements does so at his peril.
