What the Massachusetts Prompt Payment Ruling Means for U.S. Contractors

You finished the phase, sent the pay application, and the general contractor is five weeks into "processing it." Massachusetts has a statute built for exactly that situation, and in June 2024 the state's Supreme Judicial Court ruled on what happens when the party holding your money does not pay. It is the Massachusetts prompt payment ruling contractor pay disputes in that state now turn on.

This article covers the Massachusetts statute and the 2024 ruling under it; it does not cover other states' prompt-payment laws.

Who the Prompt Pay Act covers

The statute is Chapter 149, Section 29E, Massachusetts' Prompt Pay Act. Under the section, it reaches private construction contracts with an original contract price of $3,000,000 or more where a lien could be established under chapter 254. Projects containing one to four dwelling units are excluded from the definition, so single-family and small residential work sits outside the statute whatever its price.

How long a contractor has to pay a subcontractor

For each periodic progress payment on a covered job, the section sets three clocks: 30 days for submission of the application, 15 days for the party receiving it to approve or reject, and 45 days after approval to pay. The approval window stretches 7 more days for each tier of contract below the owner. Run at their limits, those clocks still put a compliant payment about two months out from your application: 15 days to a decision, 45 more to the money.

The enforcement mechanism is silence. An application that is neither approved nor rejected within the window is deemed approved. A rejection, to count, has to be in writing, explain its factual and contractual basis, and be certified as made in good faith. The party above can still send one at any point before the payment due date; after that date, the deemed approval stands.

The section also voids the contract clauses that make waiting unbearable. A term that delays the start of dispute procedures more than 60 days after a rejection is unenforceable. So is a term requiring you to keep working while an approved payment sits more than 30 days past due. That bar carries two exceptions: a dispute over the quality or quantity of the work, and a default after approval where you received prior written notice certified as made in good faith and every sum not tied to it. Any clause purporting to waive or limit the section is void outright.

What the Supreme Judicial Court decided in June 2024

On June 17, 2024, the court issued its first opinion on the Prompt Pay Act, M.G.L. c. 149, § 29E. The case asked what a contractor who has violated the Act by not paying can do when the unpaid party sues for breach of contract. The answer: the money moves first. A contractor found to have violated the Act must pay the unpaid amounts before, or at the same time as, asserting its common-law defenses in that lawsuit. The defenses survive, the court noted, but only on the far side of a payment; the contractor "must first pay the funds purportedly owed and then seek to disgorge such funds in a succeeding adjudication."

Cozen O'Connor's alert on the ruling draws the practical conclusion: an upstream party that fails to reject a payment application before the due date loses the right to withhold the approved amount, and the payment goes out even where the sums are disputed. The court also noted that a preliminary injunction ordering immediate payment can be justified where the failure to pay causes irreparable harm to a contractor's business.

Retainage has its own statute

Holdbacks are governed by Section 29F, which uses the same $3,000,000 threshold and the same exclusion for projects of one to four dwelling units. No contract may include retainage above 5% of any progress payment. The prime contractor submits a notice of substantial completion within 14 days of reaching it, and the owner then has 14 days to accept or reject; if the signed notice does not come back inside that window, it is treated as accepted.

Once any dispute over the retainage is resolved, an application for it must be paid within 30 days of submission, again with 7 extra days per tier below. What can be withheld against it is capped. For incomplete or missing deliverables, the cap is either the value the parties agreed on in writing or, absent agreement, no more than 2.5% of the adjusted contract price. For unfinished or defective work, it is 150% of the reasonable cost to complete or correct it. Waiver clauses are void here too.

If your customer is a state department

Public work runs on different paper: the Commonwealth's bill-paying policy, set by the Office of the Comptroller. A statewide contractor that is not paid within 45 days of the later of the department's receipt of a correct invoice or its receipt of the goods or services is entitled to charge a late payment penalty. The clock starts on a correct invoice; one with errors does not start it. Most statewide contracts also carry prompt-payment discount terms, for example 2% for payment within 10 days of the buyer receiving the invoice and 1% within 30, and the discount is taken automatically by the Commonwealth's accounting system when payment lands inside the window.

What to watch on your next pay application

On a covered private job, the sequence to track is 15 days to an approval or rejection, 45 days after approval to payment, and deemed approval on silence. If your application has sat past those windows with no written rejection in your hand, the statute treats it as approved. A phone call saying the invoice is "under review" is not the rejection the section describes, which has to be in writing, explained, and certified in good faith.

The clauses worth checking your own contract for are the ones the section voids: keep-working requirements past 30 days on an approved, unpaid payment, waivers of the section's protections, and dispute procedures that can be pushed more than 60 days past a rejection. Retainage terms are not up for negotiation either; the 5% cap, the 30-day payment window, and the ban on waivers are in the statute itself. And where non-payment is genuinely putting the business at risk, the 2024 ruling points at one remedy: a preliminary injunction ordering immediate payment, which the court said can be justified where the failure to pay causes irreparable harm.

What the statute does not do is any of the tracking, and its $3,000,000 threshold leaves smaller jobs outside it entirely. Below that line, and on every invoice in every state, getting paid still comes down to somebody noticing the due date and following up, which is the first thing to slip when you are on site all day. Nudge runs that part for you: up to 9 SMS and email reminders per invoice on a schedule that runs from 7 days before the due date to 60 days overdue, processed once a day at 9 AM Eastern. Each reminder carries a link the customer can use to mark it paid, which stops the sequence. It works standalone or synced with QuickBooks Online, alongside the invoicing and accounting you already run rather than in place of them. Basic is $9.99 a month and Pro is $19.99, both with a 14-day free trial and no credit card to start. If the follow-up is the part that keeps slipping, that is the job invoice reminder software exists to do, and our guide on how contractors get paid faster walks the whole sequence from invoice to money in the bank.