Require construction project owners to timely pay contractors

As Reported by the House Small Business Committee

136th
General Assembly

Regular
Session
Am. H. B. No. 288

2025-2026

Representatives Roemer, Sweeney

Cosponsors: Representatives Brent,
Brennan, Brewer, Daniels, Fischer, Johnson, Piccolantonio, Rogers,
Russo, Troy

A
BILL

To
amend section 4113.61 of the Revised Code to
require
owners of private construction projects to timely pay contractors.

BE
IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section
1.
That
section 4113.61 of the Revised Code be amended to read as follows:

Sec.
4113.61.
(A)(1)

If
a contractor submits a written request for payment to a private owner
for an amount that is allowed to the contractor for properly
performed work or furnished materials, performed or furnished under a
contract with that private owner that was created after this
amendment's effective date, the private owner shall pay the amount to
the contractor, less any amount withheld as authorized by law, as
follows:

(a)
For work performed or materials furnished pursuant to plans,
drawings, specifications, or data submitted for approval to a
municipal, township, or county building department, or to the
superintendent of industrial compliance, pursuant to section 3791.04
of the Revised Code and requiring the seal of an architect or
landscape architect registered under Chapter 4703. of the Revised
Code or an engineer registered under Chapter 4733. of the Revised
Code, thirty days after the work performed or materials furnished are
certified as complying with the approved plans, drawings,
specifications, or data by an architect or landscape architect
registered under Chapter 4703. of the Revised Code or an engineer
registered under Chapter 4733. of the Revised Code, or thirty days
after receiving the request, whichever is later;

(b)
For all other work performed or materials furnished, thirty days
after receiving the request.

The
private owner may reduce the amount paid by any retainage provision
contained in the contract, invoice, or purchase order between the
private owner and contractor, and may withhold amounts that may be
necessary to resolve disputed liens or claims involving the work or
labor performed or material furnished by the contractor.

If
the private owner fails to comply with division (A)(1) of this
section, the private owner shall pay the contractor, in addition to
the payment due, interest in the amount of eighteen per cent per
annum of the payment due, beginning on the thirty-first day following
the private owner's receipt of the payment request from the
contractor and ending on the date of full payment of the payment due
plus interest to the contractor.

(2)

If
a subcontractor or material supplier submits an application or
request for payment or an invoice for materials to a contractor in
sufficient time to allow the contractor to include the application,
request, or invoice in the contractor's own pay request submitted to
an owner, the contractor, within ten calendar days after receipt of
payment from the owner for improvements to property, shall pay to
the:

(a)
Subcontractor, an amount that is equal to the percentage of
completion of the subcontractor's contract allowed by the owner for
the amount of labor or work performed;

(b)
Material supplier, an amount that is equal to all or that portion of
the invoice for materials which represents the materials furnished by
the material supplier.

The
contractor may reduce the amount paid by any retainage provision
contained in the contract, invoice, or purchase order between the
contractor and the subcontractor or material supplier, and may
withhold amounts that may be necessary to resolve disputed liens or
claims involving the work or labor performed or material furnished by
the subcontractor or material supplier.

If
the contractor fails to comply with division
(A)(1)

(A)(2)

of
this section, the contractor shall pay the subcontractor or material
supplier, in addition to the payment due, interest in the amount of
eighteen per cent per annum of the payment due, beginning on the
eleventh day following the receipt of payment from the owner and
ending on the date of full payment of the payment due plus interest
to the subcontractor or material supplier.

(2)

(3)

If
a lower tier subcontractor or lower tier material supplier submits an
application or request for payment or an invoice for materials to a
subcontractor, material supplier, or other lower tier subcontractor
or lower tier material supplier in sufficient time to allow the

subcontractor,
material supplier, or other lower tier subcontractor or lower tier
material supplier
recipient

to
include the application, request, or invoice in the
subcontractor's,
material supplier's, or other lower tier subcontractor's or lower
tier material supplier's
recipient's

own
pay request submitted to a contractor, other subcontractor, material
supplier, lower tier subcontractor, or lower tier material supplier,
the
recipient
subcontractor,
material supplier, or other lower tier subcontractor or lower tier
material supplier
,
within ten calendar days after receipt of payment from the
contractor, other subcontractor, material supplier, lower tier
subcontractor, or lower tier material supplier for improvements to
property, shall pay to the:

(a)
Lower tier subcontractor, an amount that is equal to the percentage
of completion of the lower tier subcontractor's contract allowed by
the owner for the amount of labor or work performed;

(b)
Lower tier material supplier, an amount that is equal to all or that
portion of the invoice for materials which represents the materials
furnished by the lower tier material supplier.

The
subcontractor, material supplier, lower tier subcontractor, or lower
tier material supplier may reduce the amount paid by any retainage
provision contained in the contract, invoice, or purchase order
between the subcontractor, material supplier, lower tier
subcontractor, or lower tier material supplier and the lower tier
subcontractor or lower tier material supplier, and may withhold
amounts that may be necessary to resolve disputed liens or claims
involving the work or labor performed or material furnished by the
lower tier subcontractor or lower tier material supplier.

If
the subcontractor, material supplier, lower tier subcontractor, or
lower tier material supplier fails to comply with division
(A)(2)

(A)(3)

of
this section, the subcontractor, material supplier, lower tier
subcontractor, or lower tier material supplier shall pay the lower
tier subcontractor or lower tier material supplier, in addition to
the payment due, interest in the amount of eighteen per cent per
annum of the payment due, beginning on the eleventh day following the
receipt of payment from the contractor, other subcontractor, material
supplier, lower tier subcontractor, or lower tier material supplier
and ending on the date of full payment of the payment due plus
interest to the lower tier subcontractor or lower tier material
supplier.

(3)

(4)

If
a contractor receives any final retainage from the owner for
improvements to property, the contractor shall pay from that
retainage each subcontractor and material supplier the
subcontractor's or material supplier's proportion of the retainage,
within ten calendar days after receipt of the retainage from the
owner, or within the time period provided in a contract, invoice, or
purchase order between the contractor and the subcontractor or
material supplier, whichever time period is shorter, provided that
the contractor has determined that the subcontractor's or material
supplier's work, labor, and materials have been satisfactorily
performed or furnished and that the owner has approved the
subcontractor's or material supplier's work, labor, and materials.

If
the contractor fails to pay a subcontractor or material supplier
within the appropriate time period, the contractor shall pay the
subcontractor or material supplier, in addition to the retainage due,
interest in the amount of eighteen per cent per annum of the
retainage due, beginning on the eleventh day following the receipt of
the retainage from the owner and ending on the date of full payment
of the retainage due plus interest to the subcontractor or material
supplier.

(4)

(5)

If
a subcontractor, material supplier, lower tier subcontractor, or
lower tier material supplier receives any final retainage from the
contractor or other subcontractor, lower tier subcontractor, or lower
tier material supplier for improvements to property, the

recipient
subcontractor,
material supplier, lower tier subcontractor, or lower tier material
supplier

shall pay from that retainage each lower tier
subcontractor

subcontractor's

or

lower
tier the lower tier subcontractor's or
lower
tier material supplier's proportion of the retainage, within ten
calendar days after receipt of payment

from
the contractor or other subcontractor, lower tier subcontractor, or
lower tier material supplier
,
or within the time period provided in a contract, invoice, or
purchase order between the subcontractor, material supplier, lower
tier subcontractor, or lower tier material supplier and the lower
tier subcontractor or lower tier material supplier, whichever time
period is shorter, provided that the
subcontractor,
material supplier, lower tier subcontractor, or lower tier material
supplier
recipient

has
determined that the lower tier subcontractor's or lower tier material
supplier's work, labor, and materials have been satisfactorily
performed or furnished and that the owner has approved the lower tier
subcontractor's or lower tier material supplier's work, labor, and
materials.

If
the
subcontractor,
material supplier, lower tier subcontractor, or lower tier material
supplier
recipient

fails
to pay the lower tier subcontractor or lower tier material supplier
within the appropriate time period, the
subcontractor,
material supplier, lower tier subcontractor, or lower tier material
supplier
recipient

shall
pay the lower tier subcontractor or lower tier material supplier, in
addition to the retainage due, interest in the amount of eighteen per
cent per annum of the retainage due, beginning on the eleventh day
following the receipt of the retainage from the contractor or other
subcontractor, lower tier subcontractor, or lower tier material
supplier and ending on the date of full payment of the retainage due
plus interest to the lower tier subcontractor or lower tier material
supplier.

(5)

(6)

A
contractor, subcontractor, or lower tier subcontractor shall pay a
laborer wages due within ten days of payment of any application or
request for payment or the receipt of any retainage from an owner,
contractor, subcontractor, or lower tier subcontractor.

If
the contractor, subcontractor, or lower tier subcontractor fails to
pay the laborer wages due within the appropriate time period, the
contractor, subcontractor, or lower tier subcontractor shall pay the
laborer, in addition to the wages due, interest in the amount of
eighteen per cent per annum of the wages due, beginning on the
eleventh day following the receipt of payment from the owner,
contractor, subcontractor, or lower tier subcontractor and ending on
the date of full payment of the wages due plus interest to the
laborer.

(B)(1)
If a
contractor,
subcontractor, material supplier, lower tier subcontractor, or lower
tier material supplier
person
owing payment under division (A) of this section
has
not made payment in compliance with
that

division

(A)(1),
(2), (3), (4), or (5) of this section
within
thirty days after payment is due,
a
subcontractor, material supplier, lower tier subcontractor, lower
tier material supplier, or laborer
the
person owed payment
may
file a civil action to recover the amount due plus
the

interest

provided
in those divisions
.
If the court finds in the civil action that
a
contractor, subcontractor, material supplier, lower tier
subcontractor, or lower tier material supplier
the
person owing payment
has
not made payment in compliance with

those
divisions

division
(A) of this section
,
the court shall award the interest specified in
those
divisions
that
division
,
in addition to the amount due. Except as provided in division (B)(3)
of this section, the court shall award the prevailing party
reasonable attorney fees and court costs.

(2)
In making a determination to award attorney fees under division
(B)(1) of this section, the court shall consider all relevant
factors, including but not limited to the following:

(a)
The presence or absence of good faith allegations or defenses
asserted by the parties;

(b)
The proportion of the amount of recovery as it relates to the amount
demanded;

(c)
The nature of the services rendered and the time expended in
rendering the services.

(3)
The court shall not award attorney fees under division (B)(1) of this
section if the court determines, following a hearing on the payment
of attorney fees, that the payment of attorney fees to the prevailing
party would be inequitable.

(C)
This section does not apply to any construction or improvement of any
single-, two-, or three-family detached dwelling houses.

(D)(1)
No provision of this section regarding entitlement to interest,
attorney fees, or court costs may be waived by agreement and any such
term in any contract or agreement is void and unenforceable as
against public policy.

(2)

This

(a)
Subject to division (D)(2)(b) of this section, this
section
shall not be construed as impairing or affecting, in any way, the
terms and conditions of any contract, invoice, purchase order, or any
other agreement between
a

any
of the following:

(i)
An owner and a contractor;

(ii)
A
contractor
and a subcontractor or a material supplier

or
between a
;

(iii)
A
subcontractor
and another subcontractor, a material supplier, a lower tier
subcontractor, or a lower tier material supplier
,
except that if such
.

(b)
If
terms
and conditions

described
in division (D)(2)(a) of this section

contain time periods
which

that

are
longer than any of the time periods specified in divisions (A)(1),
(2), (3), (4),
and

(5)
,
and (6)

of this section or interest at a percentage less than the interest
stated in those divisions, then the provisions of this section shall
prevail over such terms and conditions.

(E)
Notwithstanding the definition of lower tier material supplier in
this section, a person is not a lower tier material supplier unless
the materials supplied by the person are:

(1)
Furnished with the intent, as evidenced by the contract of sale, the
delivery order, delivery to the site, or by other evidence that the
materials are to be used on a particular structure or improvement;

(2)
Incorporated in the improvement or consumed as normal wastage in the
course of the improvement; or

(3)
Specifically fabricated for incorporation in the improvement and not
readily resalable in the ordinary course of the fabricator's business
even if not actually incorporated in the improvement.

(F)

This
section does not apply to any agreement:

(1)
To explore, produce, or develop oil, natural gas, natural gas
liquids, synthetic gas, sulphur, ore, or other mineral substances,
including any lease or royalty agreement, joint interest agreement,
production or production-related agreement, operating agreement,
farmout agreement, area of mutual interest agreement, or other
related agreement;

(2)
For any well or mine services;

(3)
To purchase, sell, gather, store, or transport oil, natural gas,
natural gas liquids, synthetic gas, or other hydrocarbon substances
by pipeline or by a fixed, associated facility.

(G)

As used in this section:

(1)

"Agreement"
includes a written or oral agreement or understanding for either of
the following:

(a)
To provide work or services for a pipeline, including any
construction, operating, repair, or maintenance services;

(b)
To perform a part of the services covered by division (G)(1)(a) of
this section or an act collateral to those services, including
furnishing or renting equipment, incidental transportation, or other
goods and services furnished in connection with those services.

(2)

"Contractor"
means any person who undertakes to construct, alter, erect, improve,
repair, demolish, remove, dig, or drill any part of a structure or
improvement under a contract with an owner, a "construction
manager" or "construction manager at risk" as those
terms are defined in section 9.33 of the Revised Code, or a
"design-build firm" as that term is defined in section
153.65 of the Revised Code.

(2)

(3)

"Laborer,"
"material supplier," "subcontractor," and "wages"
have the same meanings as in section 1311.01 of the Revised Code.

(3)

(4)

"Lower
tier subcontractor" means a subcontractor who is not in privity
of contract with a contractor but is in privity of contract with
another subcontractor.

(4)

(5)

"Lower
tier material supplier" means a material supplier who is not in
privity of contract with a contractor but is in privity of contract
with another subcontractor or a material supplier.

(5)

(6)
"Owner" means the holder of any right, title, or interest,
either legal or equitable, in the real estate upon which improvements
are made, including interests held under a contract of purchase,
whether in writing or otherwise.

(7)
"Private owner" means an owner that is not a public owner.

(8)
"Public owner" means an owner that is the state, or a
county, township, municipal corporation, school district, or other
political subdivision of the state, or any public agency, authority,
board, commission, instrumentality, or special district of or in the
state, and any officer or agent thereof.

(9)

"Wages
due" means the wages due to a laborer as of the date a
contractor or subcontractor receives payment for any application or
request for payment or retainage from any owner, contractor, or
subcontractor.

(6)
"Owner" includes the state, and a county, township,
municipal corporation, school district, or other political
subdivision of the state, and any public agency, authority, board,
commission, instrumentality, or special district of or in the state
or a county, township, municipal corporation, school district, or
other political subdivision of the state, and any officer or agent
thereof and relates to all the interests either legal or equitable,
which a person may have in the real estate upon which improvements
are made, including interests held by any person under contracts of
purchase, whether in writing or otherwise.

(10)
"Well or mine services" includes any of the following:

(a)
Drilling, deepening, reworking, repairing, improving, testing,
treating, perforating, acidizing, logging, conditioning, purchasing,
gathering, storing, or transporting oil or natural gas, brine water,
fresh water, produced water, condensate, petroleum products, or other
liquid commodities, or otherwise rendering services in connection
with a well drilled to produce or dispose of oil, gas, or other
minerals or water;

(b)
Designing, excavating, constructing, improving, or otherwise
rendering services in connection with an oil, gas, or other mineral
production platform or facility, mine shaft, drift, or other
structure intended directly for use in exploring for or producing a
mineral.

Section
2.
That
existing section 4113.61 of the Revised Code is hereby repealed.

Section
3.
Sections
1 and 2 of this act take effect six months after the effective date
of this section.