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Ensuring that general contractors receive payment for their work is incredibly important. Without proper protections in place, contracting companies could face massive losses due to late payments.

For instance, large corporations may secure general contractors for construction projects and fail to pay promptly. This can put a strain on small businesses and general contractors alike. 

Thankfully, some Ohio lawmakers are working to change this. They are crafting legislation to protect Ohio’s general contractors and small construction businesses.

Recently, Ohio lawmaker John Cross (R-Kenton) announced that the Ohio House of Representatives has passed HB 68. This is a bipartisan piece of legislation that relates to payment of contractors in the state.

This bill is an amendment to Ohio’s Prompt Pay Act (ORC Section 4113.61). The proposed amendment extends payment protections to general contractors. 

HB 68 provides general contractors with the same payment protections that subcontractors currently enjoy. 

What Exactly Does House Bill 68 Do?

HB 68 is a payment protection bill for general contractors. In short, the payment protection consists of a time limit by which general contractors must receive payment for their completed work.

Under current Ohio law, there is no legally required limit for the timeline for commercial entities to pay general contractors. This important bipartisan legislation institutes a 30-day payment period for contracting projects. 

How is House Bill 68 Different from Other Bills?

This bill is very similar to House Bill 380. HB 380 was proposed by the Ohio House of Representatives in October of 2019. It did not progress past the committee phase.

There are two significant differences between House Bill 68 and the previously proposed bill. 

Shorter Pay Period 

The previous bill would have required commercial entities to pay general contractors within 35 days of receiving contract invoices. 

House Bill 68, on the other hand, shortens this required pay period to 30 days. This helps to ensure that Ohio contractors are paid in a reasonable amount of time. 

Two Payment Triggers

Another distinction from HB 380 is the inclusion of two separate triggers for the 30-day payment period. These triggers depend on whether a contracted project requires approval by the local government or not.

For all privately contracted projects, the owner must issue payment to the contractor or company no more than 30 days after receiving a request for payment. 

When a project necessitates a seal by an architect and local government approval, the 30 day payment period may be adjusted. Specifically, owners must pay no more than 30 days from whichever of the following happens later:

• The contracted work is certified as compliant with all regulations
• The owner receives a bill from the general contractor

HB 68 allows owners to withhold a retainage amount, but the bill does not require it. Owners may also withhold amounts for unresolved claims or liens.

What Are the Penalties for Violating the Proposed Law?

Anyone who contracts work and does not meet the 30-day payment requirement would be subject to certain penalties. 

Those who violate the regulation would have to pay interest, starting on the 31^st day after payment was requested. The interest rate would be 18% annually.

Also, HB 68 gives the state courts the power to award legal fees to the prevailing party in the case of any civil action regarding the payment period.

Benefits for Ohio Contractors

If passed into law, this bipartisan bill would put important measures in place to financially support Ohio’s general contractors. Following its passage in the House, HB 68 will proceed to the Ohio State Senate for further consideration.

If you are interested in securing an Ohio contractor’s license, RocketCert can help!

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