Senate Committee Approves Bill to Help Contractors

The Senate Business and Labor Committee approved a measure Monday to extend the same protection given to contractors on public projects under the Fair Pay and Construction Act to those working on private projects. Sen. Harry Coates is the author of Senate Bills 1012 which would help ensure contractors are paid in a timely manner for their work

“There is a serious problem, especially with the downturn in the economy, where contractors are working on private construction jobs and aren’t getting paid in a timely manner,” said Coates, R-Seminole. “They invest their money in a project only to find out that the developer doesn’t have all of his finances in order. This is grossly unfair and needs to change.”

SB 1012, the Private Construction Progress Payment Act, would require owners on any private construction contract lasting over 60 days to make progress payments to the contractor. The owner would have to designate the time period in which the contractor could expect the progress payments into the general specifications of the contract.

“Unlike public construction, there aren’t any rules outlining payment and timelines in the private sector, but there needs to be to protect those working on these jobs, and that’s why I authored this bill,” said Coates. “It’s unprofessional and disrespectful not to pay your workers, and that’s exactly what’s happening to our private contractors.”

The bill also addresses subcontractors and material suppliers stating that if they have performed their duties as outlined in the contract, then they should be paid no later than seven days after the contractor is paid.
Under SB 1012, if a progress payment is not properly issued, it will be considered a material breach of a construction contract. If payment is not received within 14 days of when it should have been, a contractor or subcontractor can stop working or may terminate a construction contract. In order to do this, the contractor would have to provide the owner with a written notice at least three days before any such intended suspension or termination, while a subcontractor must give at least seven days notice.

“This bill will help ensure that these hard working men and women don’t have to suffer financially because of the irresponsibility of an owner,” said Coates. “These men and women work hard to ensure that their clients get the best construction possible, and they shouldn’t have to stress about when they’re going to get paid. Just like the owners, they have bills to pay and families to support.”

Coates, who is the chairman of the Business and Labor Committee, said his bill would not apply to contracts for single, two, three, or four family dwellings. It would also only apply to contracts entered into on or after November 1, 2009.

SB 1012 will next go before the full Senate for further consideration.