Way back in 2010 (way back, right?), I wrote an article about the sad fact that Washington does not have a Prompt Payment Act. What I probably should have said is that the state lacks a private Prompt Payment Act, mandating quick payment in private construction. Because if you are on a public project, Prompt Payment obligations do exist.
In my earlier article I noted that states like Louisiana, Wisconsin, Alabama, Tennessee, Georgia, New York, Arizona, Nebraska and Illinois had all taken steps to facilitate timely payment on construction projects. In fact, that article outlined a new Arizona law which established retainage and final-payment timetables for properly completed construction work. Failure to comply with the timetables results in penalties of 1.5% monthly interest charges. Further, owner retainage was limited to 150% of the value of punch list items.
Washington does not have a private mandate. But, that does not mean that there is no foundation for it. Washington does impose similar “prompt pay” enforcement through means of equity. In fact, a Washington Court of Appeals overturned a summary judgment award given to bank who had allegedly mishandled construction funds in Westview Investments, Ltd. v. U.S. Bank National Association.
But, Washington does have a public mandate. RCW 39.76.011 requires public agencies to pay a 1% monthly interest on all payments not issued within 30 days of receipt of an invoice. While there are some very minor exceptions to this rule (See RCW 39.76.020), most general contractors should be entitled to recoup interest when not paid timely.
Perhaps most enticing to prime contractors, RCW 39.76.040 provides statutory attorneys fees for any action to recoup this interest. Therefore, contractors have a mechanism for forcing an agency’s hand.