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When a Contractor Refuses to Pay a Subcontractor: What to Do

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Contracted workers enter work agreements expecting to get paid for their labor and time. If you’re not paid by a contractor for your work as a subcontractor, you can take several steps to verify your rights and request payment.

Contract laws vary by state, and federal contractors also have their own laws to follow, so contractors and subcontractors should learn their rights in the specific areas they work in. This guide provides a general idea of how to navigate payment contracts between contractors and subcontractors, including what to do if a contractor does not pay you.

Knowing Your Rights as a Subcontractor 

As a subcontractor, your first step to ensuring you receive your payment is knowing your rights before taking on a job. You should familiarize yourself with the contract laws in your area and verify that all your proceedings with a contractor comply with these laws. 

It’s best to stay organized and updated on any changes to contract laws, so you can easily review proposed contracts and only agree to jobs that will uphold your working and payment rights. If a contractor wrongfully refuses to pay you, you have specific rights you can claim. 

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Right to a Contract

Contracts are one of your most important tools. All subcontractors have the right to a contract that outlines expectations for every aspect of their job. Contracts include agreed-upon rules for the contractor-subcontractor relationship that protect you from being taken advantage of.

Every subcontract job should include a contract document covering all the terms of work and payment. The contract should clearly state what you need to do to get paid and how and when you’ll get paid, so you always know how to receive what you’re owed. In writing, the contract should state that it’s mutually binding, meaning both you and the contractor should agree to its terms.

Contracts should also include:

  • A warranty: You should agree that all equipment and materials you use will be new or of good quality and defect-free.
  • A nondiscrimination provision: The contract must contain a section that requires both parties to comply with applicable equal employment opportunity laws.
  • A dispute resolution provision: The contract should also contain a section outlining how you and the contractor should resolve any disputes that arise.

Whenever you receive a contract for a job, you should read it thoroughly to understand what it states and ensure it covers all the necessary terms to help you perform your job as expected and receive your payment.

Right to Receive Payment

When reading over a contract, you should ensure the document clearly states how much you’ll be compensated, as well as how and when you’ll receive this compensation. The contract should include this information in a clearly marked section and should comply with laws that state you should receive your payment within 10 days of the contractor being paid.

Contracts protect subcontractors from unfair payment situations by providing a written agreement. The contractor provides the terms of payment, and as long as you follow these terms, the contractor is legally obligated to pay you as you initially agreed.

Contracts should also be free from terms or conditions meant to prohibit you from exercising your rights to request payment through legal action if the contractor doesn’t pay you according to your contract.

When Contractors Can Legally Withhold Payment

Usually, general contractors are in charge of coordinating subcontractors and supervising their work. Within these duties, contractors are responsible for paying subcontractors for their work. 

typical subcontractor payment process begins with you giving the contractor your payment request within enough time for the contractor to include it in their own payment request. The contractor submits this combined payment request to the owner of the property they’re working on. 

After receiving their own payment from the property owner, the contractor has 10 days to pay you the amount you’re owed. Often, subcontractors may not get paid until long after the 10 days are up, either for valid legal reasons, accidental disorganization or genuine contractor negligence.

In some cases, contractors can hold off on paying a subcontractor based on specific legal discrepancies. A contractor is legally allowed to refuse payment to you if: 

  • You have violated the terms of the initial contract you and the contractor had agreed upon.
  • You have not performed your job to the standards both parties agreed upon.
  • The contractor must resolve disputed claims involving your work.

As a subcontractor, you can pursue legal action against your contractors for illegally withholding payment. However, you should also take certain actions within your work to avoid payment issues, including: 

  • Knowing about