Arizona Extends Prompt Payment Protection to Design Professionals

Since the original enactment of the Arizona Prompt Payment Act in 2000, Arizona licensed contractors and subcontractors and material suppliers have enjoyed prompt payment protection in connection with private construction projects. Other legislation has extended similar protection for work performed on public projects.

Unfortunately for design professionals, Arizona law has not provided similar protection to them. That changed, to a degree, on July 3, 2015, when the Arizona Design Professional Prompt Pay Act went into effect. The Act provides prompt payment for architects and engineers that perform work on public (but not private) construction projects.

The Act amended various statutes that affect payment to design professionals on public projects.

CONTRACTS WITH CONTRACTORS AND SUBS

A.R.S. § 34-221 now provides that, on public projects for entities other than the State of Arizona or the Arizona Department of Transportation (ADOT), a contractor’s prompt payment obligations to subcontractors and suppliers protects design professionals as well. Specifically, payment is due to the design professional within seven days after the contractor (or subcontractor) receives payment. Late payments are subject to interest of 1% per month.

Similar prompt payment protection for design professionals is contained in amendments to A.R.S. § 41-2577 and A.R.S. § 28-411 for work performed for, respectively, the State of Arizona and ADOT.

LIMITATIONS

It is important to note that prompt payment protection still does not apply to amounts owed to design professionals whose contract is directly with the public entity. The new Act applies only to public projects in which the design professional is retained by the contractor.

Nevertheless, many architects and engineers will benefit from the newly enacted statutory provisions that help ensure that they will be paid in a timely fashion.