Louisiana’s Prompt Payment Rules Now Require Owners to Pay Contractors Within Thirty-Five Days of Request and Public Owners Can No Longer Withhold Liquidated Damages, Except Under Limited Circumstances 

Acts 822 and 255 – –

Authors: Christopher K. LeMieux, Olivia D. Maynard, and John E. B. Ransone

I. Act 822

Act 822 outlines prompt payment to contractors and subcontractors and updates Louisiana’s prompt payment law for private construction projects by strengthening deadlines, clarifying payment obligations, and standardizing penalties. Act 822 now requires owners to pay contractors within 35 days after receiving a proper written payment request, and if they fail to do so without a good-faith dispute, they are subject to penalties in addition to any other contractual remedies. It also significantly revises how payments must flow down the contracting chain by requiring contractors to pay subcontractors—and subcontractors to pay lower-tier subs and suppliers—within seven days of receiving payment, with amounts tied specifically to the value of work performed or materials supplied rather than prior percentage-based formulas. Interest is included.

If the contractor or subcontractor fails to make an owed payment to his subcontractors and suppliers within seven consecutive days of the receipt of the payment from the owner for improvements to an immovable in the absence of a good faith dispute, the contractor or subcontractor shall pay to the subcontractors and suppliers, in addition to the payment, a penalty in the amount of one and a half percent of the amount due; per day, beginning on the day after the date on which the payment is due.

A good faith dispute may include a dispute regarding whether the work was performed in a proper manner.  

If a good faith dispute exists concerning an amount owed for a payment under a contract for construction, the disputing party must pay the amount that is not in dispute within the time frame established in this section. An unpaid amount as described in this section shall have an interest rate of 1.5% each day, capped at 15%. Interest stops accruing on the earlier date of delivery of payment, the date payment is mailed (if delivered within 3 days), or the date a judgment is rendered on an action brought pursuant to this Section. Any waiver of a provision in this section is absolutely null.

Importantly, Act 822 introduces a clear rule that any contractual waiver of these prompt payment protections is null, with a limited exception allowing up to 61 days for payment in certain single-family residential contracts.

Takeaway:
Overall, Act 822 strengthens payment protections for subcontractors and suppliers by shortening payment timelines, providing clarity in allocation methods, and making penalties more predictable and consistently enforceable. Contractors and owners face greater financial consequences for delay and less flexibility to contract around these rules, while lower-tier parties gain stronger leverage and faster access to funds. This likely reduces payment disputes but increases compliance pressure and litigation risk for those who fail to meet the stricter deadlines.

II. Act 255

Amends La. R.S. 38:2191(C) – (E); Adds La. R.S. 38:2191(F).  Expands upon the prompt pay statute against public entities.

Act 255 revises Louisiana’s public works prompt payment statute (La. R.S. 38:2191) by significantly limiting a public entity’s ability to withhold payments and clarifying enforcement and remedies. Public entities may no longer withhold contested liquidated damages from amounts otherwise owed to contractors, unless payment to the contractor would prejudice the entity’s ability to assert a claim. Instead, the entity must pay the contractor and pursue liquidated damages separately through an ordinary proceeding, preserving its claim without interrupting payments owed. Act 255 also provides that the prevailing party in such a liquidated damages dispute is entitled to attorney’s fees, and allows the public entity to recover interest on liquidated damages accruing from the date it paid the contested amount.

The amendments further strengthen contractor protections by stating that these prompt payment provisions cannot be waived by contract, eliminating prior flexibility to contract around them. In addition, while existing law already allowed mandamus to compel payment, the revisions expand and clarify remedies: courts may order payment together with attorney’s fees and interest, and if the public entity successfully defends such an action, the contractor may be required to pay the entity’s attorney’s fees. However, the bill also limits mandamus by specifying that claims by a public entity to recover liquidated damages must be pursued separately and cannot be resolved within a mandamus action. Finally, the bill adds clarity that even if a public works contract is later declared null for statutory violations, contractors are still entitled to payment (including overhead and profit) for work already performed.

Takeaway:
Overall, Act 255 shifts the balance strongly in favor of contractors by ensuring steady payment flow on public projects, even when disputes over liquidated damages arise. Public entities lose a major leverage tool (i.e. withholding funds) and must instead pursue damages through separate litigation, which may increase administrative burden and litigation costs. Contractors benefit from improved liquidity and clearer rights to payment, along with enhanced fee-shifting provisions that make it easier to enforce those rights. At the same time, both sides face greater exposure to attorney’s fees and interest, which will likely encourage quicker resolution of any dispute but also raise the stakes of litigation.