Kentucky's Senate Bill 76, introduced on January 10, 2025, aims to enhance payment timelines and accountability within the construction industry. The bill mandates that contracting entities must pay contractors within 45 business days of receiving a properly completed and undisputed request for payment. If this deadline is not met, the contracting entity will incur interest on the unpaid amount at a rate of 12% per annum starting from the 46th day.

Additionally, the bill stipulates that contractors are required to pay their subcontractors any undisputed amounts within 15 business days of receiving payment from the contracting entity. Failure to comply will also result in a 12% interest penalty beginning on the 16th business day after the contractor receives payment.

This legislation addresses long-standing issues of delayed payments in the construction sector, which have often led to financial strain for contractors and subcontractors alike. By enforcing stricter payment timelines and introducing penalties for non-compliance, Senate Bill 76 seeks to foster a more equitable financial environment for all parties involved in construction projects.

The bill has sparked discussions among industry stakeholders, with proponents arguing that it will improve cash flow and project efficiency, while critics express concerns about the potential for increased costs for contracting entities. As the bill progresses through the legislative process, its implications for the construction industry and the broader economic landscape in Kentucky will be closely monitored.

If passed, Senate Bill 76 could significantly alter the dynamics of contractor-subcontractor relationships and enhance financial stability within the construction sector, ultimately benefiting the state's economy.