Louisiana's prompt pay statute, La. R.S. 9:2784, will undergo significant changes effective August 1, 2026, requiring prompt payment by owners to general contractors, eliminating the prior cap on prompt payment penalties, and reducing the prompt payment deadline from 14 days to seven days. Further, the statute will no longer include an exception for residential projects, and parties cannot waive the statute's requirements.
Prior Law
Prior to Act 822 of the 2026 Louisiana Legislative Session, La. R.S. 9:2784 focused almost entirely downstream. It required contractors and subcontractors to pass along payments to lower-tier subcontractors and suppliers within 14 days of receipt of the upstream payment. Violators faced a 0.5 percent-per-day penalty, capped at 15 percent of the unpaid balance, plus potential attorneys' fees and costs. The statute imposed no comparable deadline or penalty on owners for payments to general contractors. It also exempted improvements to immovables used for "residential purposes."
Key Changes Under Act 822
With the passage of Act 822, the statute now, for the first time, addresses payments by project owners. The Act requires owners (or their authorized agents) to pay general contractors within 35 days of receiving a written payment request for properly performed work, suitably stored materials, or specially fabricated materials, unless a good-faith dispute exists. If the owner secured a construction loan before the payment request and timely and properly requested disbursement, the deadline extends to the later of (i) 35 days after the owner receives the payment request or (ii) five days after receiving the loan proceeds.
If an owner misses the 35-day deadline without a good-faith dispute, the contractor is entitled to recover the unpaid amount plus a 1.5 percent penalty per month, starting the day after payment becomes due. This 1.5 percent-per-month penalty also applies downstream when contractors and subcontractors of any tier fail to pay their subcontractors and suppliers. Importantly, the amendment removes the 15 percent cap on that penalty. Penalties stop accruing on the earliest of: (i) delivery of payment, (ii) the mailing date if delivered within three days, or (iii) entry of judgment in an action under the statute.
The Act also reduces the prompt payment deadline for general contractors and subcontractors. When a general contractor or subcontractor receives payment, it must now pay each of its lower-tier subcontractors and suppliers within seven days – half the pre-amendment 14-day window. Even when parties dispute part of an invoice, they must still promptly pay the undisputed portion. Partial disputes cannot justify withholding payment for undisputed work or materials.
Act 822 also eliminates the statute's prior residential exception. Before Act 822, the statute exempted "improvements to an immovable that is used for residential purposes." Recently, the Western District of Louisiana relied on this carve-out in SRP Environmental Co. v. Claremont Property Co. (W.D. La. June 2, 2026) to deny a subcontractor's prompt payment claim on condominium work. With Act 822's removal of the exception, residential projects now fall within the statute.
The statute now creates an express cause of action (in addition to other contractual or legal remedies), with attorneys' fees and costs available to the prevailing party. Subject to limited exceptions, any waiver of the statute's provisions is an absolute nullity.
Conclusion
Act 822 raises the stakes for all parties on Louisiana construction projects by removing the penalty cap, shortening payment deadlines, and imposing new obligations on owners. Unfortunately, the revised statute may also spur litigation where parties otherwise might compromise.
Pay applications often contain errors, and disputes over them persist for owners and contractors alike. The statute offers safe harbors for good-faith disputes and valid withholding, but unlimited penalties may discourage compromise. Worse, downstream contractors may delay resolution to maximize recovery.
Owners and general contractors should draft downstream contracts to guard against misuse of the new law. Although the statute cannot be waived, owners may attempt to delay the date they "receive a written payment request" by requiring pre-submittal pay application reviews or other procedures intended to ensure that pay applications are complete and compliant when submitted. Both owners and general contractors may also better define in advance what qualifies as a "good-faith dispute."
Owners, general contractors, subcontractors, and suppliers should review their contract forms, payment procedures, and compliance protocols before the August 1, 2026, effective date. Baker Donelson's Construction Group stands ready to assist with contract updates, compliance guidance, and questions regarding these critical changes to Louisiana's prompt payment law.