Alabama (AL) Prompt Payment Laws

General Contractors

State: Payment is due within 30 days after receipt of a proper payment request.

Local: Payment is due within 35 days after approval of a payment request.

If there is a dispute of the payment request, the entity must notify the general contractor within 15 days of receipt.

Subcontractors and Suppliers

After the General Contractor receives payment, payment is due within 7 days to the Subcontractor. After the Subcontractor receives payment, payment is due within 7 days to the Suppliers.

If there is a dispute of the payment request, the other party must be notified within 5 days of receipt.

Interest and Fees

For late and wrongfully withheld payments, interest will accrue at a rate of the “legal amount currently charged by the state.” For local projects, the interest rate is equal to the rate assessed for the underpayment of taxes set by the US Secretary of Treasury.

Additional Prompt Payment Information

Alabama’s prompt payment laws for public projects are split into two sections (state projects and local/municipal government projects)

Payment may be withheld for the following reasons:

• Unsatisfactory progress
• Lack of remedied action for defective construction
• Disputed work
• A claim filed by a third party or reasonable evidence that a claim will be filed
• Failure to make timely payments
• Property damage to owner, contractor, or subs
• Reasonable evidence that the contract cannot be completed for the unpaid balance of the contract or contract sum

Payment may only be withheld after a notice has been provided, and the amount withheld can only be 2 times the disputed amount. 

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