If you build, hire a builder, or get paid on construction projects in Louisiana, there’s a new law you cannot afford to ignore. House Bill 638, authored by Representative Jacob Landry during the 2026 Regular Session, has been approved by the Legislature and has gone to the Governor’s desk. This new law substantially rewrites the state’s prompt payment statute—Louisiana Revised Statutes § 9:2784. This is one of the most significant changes to construction payment law in years, and virtually everyone involved in a construction project in Louisiana needs to understand it.

Here’s what you need to know and why it matters to your bottom line.

The Old Law in a Nutshell

Under the previous version of R.S. 9:2784, the statute focused primarily on one relationship: the obligation of contractors to pay their subcontractors and suppliers after receiving payment from the owner. The old law imposed a penalty of one-half of one percent per day (capped at fifteen percent of the outstanding balance) if a contractor failed to pay a subcontractor within fourteen days of receiving payment. The statute did not, in any meaningful way, impose comparable obligations or penalties on the owner for failing to pay the contractor in the first place.

What HB 638 Changes: The Big Picture

Owners Now Have a Statutory Payment Deadline

The most important change is that HB 638 creates a direct statutory obligation on the owner (or anyone authorized to act on the owner’s behalf) to pay the contractor within thirty-five (35) days of receiving a written payment request for properly performed work or suitably stored or specially fabricated materials. If the owner fails to pay within that window, the owner is now subject to a penalty—the same penalty that applies downstream. This is new. Previously, owners and contractors could negotiate payment terms, and contractors pursuing slow-paying owners were largely limited to contractual remedies or general breach-of-contract theories. Now there is a statutorily mandated payment term and a cause of action for significant penalties.

Faster Pay-When-Paid Flow-Down

Under the old law, a contractor had fourteen days after receiving payment to pay its subcontractors and suppliers. HB 638 cuts that timeline in half: contractors must now pay subcontractors and suppliers within seven days of receiving payment from the owner. Likewise, subcontractors who receive payment from a contractor must pay their own sub-subcontractors and suppliers within seven days.

A New, Uniform Penalty Structure

The old penalty structure—one-half of one percent per day (0.5%), capped at fifteen percent (15%) of the outstanding balance—has been replaced with something that can be both better and worse, depending on your situation. Under the new law, the penalty for any unpaid amount is one and one-half percent (1.5%) per month, accruing from the day after payment is due. The penalty stops accruing on the earlier of the date of delivery of payment, the date the payment is mailed (if delivered within three days), or the date a judgment is rendered on an action brought under the statute. While this is a more moderate daily rate than the old law’s half-percent-per-day penalty, there is no longer a fifteen percent cap, which means that on long-running disputes, penalties can accumulate well beyond what was possible before.

Good Faith Disputes

The new statute expressly addresses what happens when there is a genuine disagreement about the amount owed. If a good faith dispute exists concerning any portion of a payment, the party disputing the obligation must still pay the undisputed amount by the applicable deadline. Good faith disputes may include disagreements about whether work was performed properly under the contract.

Waivers Are Null and Void

HB 638 makes clear that any contractual waiver of the statute’s protections is “absolutely null.” In other words, an owner cannot include a contract clause that says “the prompt payment statute does not apply to this project.” There is one narrow exception: a written contract between an owner and a contractor for a single-family residence may extend the payment deadline to no later than sixty-one days after receipt of the payment request, but even then, any unpaid amount after the otherwise-applicable deadline will still accrue penalties.

Attorney Fees and Costs to the Prevailing Party

Under the new law, a contractor, subcontractor, or supplier may bring an action to collect payments and penalties owed under the statute, and the court shall award court costs and reasonable attorney fees to the prevailing party. This cuts both ways: if a claimant brings a frivolous action, the defendant can recover its fees.

Proration When the Owner Short-Pays

If a contractor receives less than full payment from the owner, the contractor is obligated to disburse only the funds actually received, on a prorated basis, with the contractor, subcontractors, and suppliers each receiving a share proportionate to the amount due. This is a practical acknowledgment of a common situation on troubled projects and provides some clarity for contractors caught between a non-paying owner and demanding subcontractors.

What the Statute Does Not Cover

HB 638 retains and clarifies important exclusions. It expressly does not supersede the separate prompt payment rules for public contracts under R.S. 38:2191. Additionally, agreements related to oil, gas, and mineral exploration, production, well services, pipelines, and related facilities remain exempt. The statute also does not create a right of action against a lender or insurer.

Loan Proceeds Exception for Owners

Recognizing that many owners depend on construction loan draws, the statute provides that the payment deadline for an owner is the later of thirty-five (35) days after receiving the payment request or the fifth day after receiving loan proceeds, provided the owner had obtained the loan before the contractor’s payment request and timely requested disbursement.

Practical Takeaways: What You Should Do Now

For Owners: You are now locked into thirty-five (35) day payment terms and face a statutory clock with substantial financial penalties if you miss the deadline. Review your internal approval and disbursement processes now. Not only should you ensure that payment will be made within the 35-day window imposed by the statute, but you should also maintain appropriate evidence of making timely payment in case a contractor tries to make a claim for penalties down the road.

For Contractors: You gain a powerful new direct statutory remedy against slow-paying owners, but your obligation to pay downstream has tightened from fourteen (14) days to seven (7). Make sure your accounting department is prepared not only to make payments timely, but to have sufficient evidence of the timeliness of those payments.

For Subcontractors and Suppliers: You benefit from faster payment timelines at every level and a penalty structure that, over time, can exceed the old fifteen percent cap. You also have a clear statutory right to bring an action and recover attorney fees if you prevail.

For Everyone: Contractual waivers of these protections are void. If you have existing form contracts that contain payment terms longer than thirty-five days or attempt to disclaim or work around Louisiana’s prompt payment statute, those provisions are now unenforceable and should be revised immediately.

The Bottom Line

HB 638 fundamentally reshapes the payment landscape for Louisiana construction projects. Whether you’re an owner, contractor, subcontractor, or supplier, now is the time to review your contracts, update your payment processes, and ensure your team understands these new obligations. If you have questions about how these changes affect your business or your existing contracts, reach out to the Kean Miller Construction Law team.

Trippe Hawthorne is a member of Kean Miller’s Construction team, advising owners, contractors, subcontractors, suppliers, and design professionals on complex construction and commercial matters. His work spans contract negotiation, procurement, licensing, payment disputes, public and private works issues, and high-stakes construction litigation across industrial, commercial, public, and residential projects. Drawing on deep experience in Louisiana construction law and dispute resolution, Trippe provides practical, business-focused counsel to help clients manage risk, navigate evolving legal requirements, and keep projects moving efficiently.