For as long as Florida has had a construction industry, a general contractor who paid a subcontractor late was facing a contract problem. Interest, a lien on the owner’s property, an uncomfortable call, eventually a lawsuit. As of July 1, 2026, the same late payment can also put the contractor’s license in front of the Construction Industry Licensing Board.
The provision that did this is four sentences long, and it arrived inside an omnibus act relating to the Department of Agriculture and Consumer Services. A great many contractors have not heard of it.
What the Statute Says
Section 489.1295, Florida Statutes, created by chapter 2026-3, section 19, Laws of Florida, is titled “Prohibition against nonpayment.” Subsection (1) provides:
- A licensed contractor must compensate a subcontractor or supplier, unless there is a bona fide dispute regarding the amount due, if any, for services, labor, or materials: (a) Within 45 days after receiving payment for the services performed or materials supplied by the subcontractor or supplier; or (b) In accordance with the terms of the contract for such services, labor, or materials.
Subsection (2) supplies the consequence. A licensed contractor who knowingly or willfully violates the section “is subject to disciplinary proceedings as provided in s. 489.129.” The section sits in part I of chapter 489, so it reaches construction contractors licensed under that part.
The same act amended section 489.105 to define who is protected, adopting the definitions in section 558.002. A subcontractor is a contractor who performs labor and supplies material on behalf of another contractor. A supplier is a person who provides only materials, equipment, or other supplies. The lumber yard and the truss plant are inside this statute alongside the framing crew.
What Is Actually at Stake
Section 489.129(1) gives the board a wide range of remedies: probation, reprimand, an administrative fine of up to $10,000 per violation, required continuing education, assessment of the costs of investigation and prosecution, and suspension, revocation, or denial of issuance or renewal of the license.
Section 489.129(2) reaches past the license itself. Where the disciplined licensee is a qualifying agent or financially responsible officer and the violation occurred on a project undertaken by the business organization, the board may impose an additional fine of up to $5,000 per violation against the business organization, or against any partner, officer, director, trustee, or member who participated in the violation or who “knew or should have known of the violation and failed to take reasonable corrective action.” Owners who have never been named in a licensing proceeding should read that clause twice.
This is not foreign territory for chapter 489. Section 489.129(1)(g)1. already treats it as financial mismanagement when valid liens are recorded against a customer’s property for supplies the contractor ordered, the contractor has been paid, and the liens are not cleared within 75 days. Section 489.1295 moves the trigger upstream. The question is no longer whether a lien was recorded and left standing. It is whether the contractor got paid and did not pass the money along.
The Subcontract Just Became a Compliance Document
Look again at the structure of subsection (1). A contractor complies by paying within 45 days of receiving payment, or in accordance with the terms of the contract. The subcontract payment article is therefore doing work it was never drafted to do, and that cuts in both directions. A form that says nothing useful defaults the company into the 45-day clock on every job. A form with a clear and workable schedule defines compliance on the company’s own terms.
This is where many Florida subcontracts are weaker than the people using them believe. Under Peacock Construction Co. v. Modern Air Conditioning, Inc., a clause tying the general contractor’s payment obligation to receipt of funds from the owner is read as a timing mechanism, not as a transfer of the owner’s credit risk to the subcontractor, unless the contract is unmistakable about it. The Florida Supreme Court placed the burden where it remains today: “in order to make such a shift the contract must unambiguously express that intention. And the burden of clear expression is on the general contractor.” 353 So. 2d 840, 842-43 (Fla. 1977).
A pay-when-paid clause that a contractor has always managed as though it were a pay-if-paid clause used to be a litigation exposure. It is now also a licensing exposure, because the contract the contractor intends to rely on under paragraph (1)(b) may not say what the contractor believes it says.
One honest caveat. Nothing has yet tested how far paragraph (1)(b) goes. A contract term that operates to defeat the statute rather than to schedule payment under it may not be read as generously as its drafter hoped. The safer posture is a payment schedule the company can actually meet, not the longest one it can write.
A Bona Fide Dispute Is a Record, Not a Position
The statute excuses payment where there is a bona fide dispute regarding the amount due. That carveout is real and sensible, and it is also the provision most likely to be tested, because someone will evaluate it after the fact by reading a file.
A dispute raised for the first time in response to a complaint reads very differently from one documented when it arose. The backcharge calculated and sent. The deficiency identified in writing. The retainage held for a stated reason. The undisputed portion of the draw paid on time while the rest is worked out. A contractor who pays what is not in dispute and papers what is has a defense. A contractor who holds the entire draw and explains months later has an argument.
The qualifier “knowingly or willfully” means an isolated administrative slip is not the target of this statute. It is worth remembering that a pattern is a different thing than a slip, and that a pattern is visible in exactly the same records.
What to Do Before the First Complaint
Four steps, none of them expensive:
- Read the payment article in the subcontract form the company is actually issuing today, not the one saved in a folder six years ago, and confirm it states a schedule the company can meet on a slow job.
- Decide whether the form is meant to shift the owner’s credit risk downstream. If it is, it has to say so unambiguously. If it is not, stop running jobs as though it does.
- Create a written record for every withholding at the time it is made, not when it is questioned.
- Pay the undisputed portion. A disagreement over part of an invoice is not a reason to hold all of it, and holding all of it is what turns a commercial dispute into a licensing file.
Fix the Form Before It Becomes Evidence
Haft Law Group represents contractors, suppliers, and owners in construction and commercial disputes in Florida. We handle this work from both sides of the invoice, which is precisely what makes the drafting useful: we have seen how these claims get built. A review of your subcontract payment terms and your withholding documentation is a short, defined engagement, and it costs a great deal less than a disciplinary file. If nobody has read your form since section 489.1295 took effect, that is the place to start.