“I’m just a bill.
Yes, I’m only a bill
And I’m sitting here on Capitol Hill.…”
“…Well, it’s a long, long journey
To the capitol city.
It’s a long, long wait
While I’m sitting in committee,
But I know I’ll be a law some day
At least I hope and pray that I will
But today I am still just a bill”
Like they warned us on Schoolhouse Rock, it is no easy feat for a bill to become enacted into law. Just ask the proposed “Prompt Pay” legislation that currently languishes in Michigan.
By way of background, “Prompt Pay” legislation is designed to incentivize entities in the construction industry to promptly pay their lower tier vendors. Penalties like interest or attorneys fees are usually the threat used to encourage people to pay their vendors timely. Such an act already exists for public projects in Michigan. But Michigan is currently in the minority of States that does not have some form of a Prompt Pay Act in the private sector.
The original bill that sought to become a prompt pay statute in Michigan was introduced in the Michigan Legislature over five years ago. Its proponents included the Construction Association of Michigan, who lists among its members many of the types of suppliers and subcontractors who would benefit from such legislation.
Initially, the bill sought to do many other things besides just enforcing a deadline for payment to vendors. It also sought to do away with the practice of upstream vendors withholding “retention”, i.e. a 10 percent “holdback” on projects. And it also sought to do away with the conditional payment clauses which have become the norm in the construction industry. Such conditional payment clauses, often called “pay-if-paid” provisions, allow a general contractor to withhold downstream payments until and unless he is paid by his upstream counter-part.
Opponents of the bill, which included the Associated General Contractors, pointed out how these ancillary issues made the bill much broader than the prompt pay legislation in other states. The bill’s opponents also complained about its burdensome requirement that the holder of any funds in dispute, must place such funds into a segregated bank account. Opponents of the bill also pointed out that certain of the timeframes contemplated in it would contradict existing timeframes that bind construction industry participants under the Michigan Construction Lien Act.
In reaction to such opposition, the proponents of the bill have since narrowed its focus, e.g. by relaxing its prohibition against retention, and removing its proscription against “pay-if-paid” clauses in construction industry contracts. Nonetheless, as of the close of the lame duck session of the 2024 Michigan Legislature, the bill — even in its more narrow form — had not yet been brought to vote. And currently, in 2025, the bill still awaits a sponsor to reintroduce it to the Legislature.
As a result, the proposed Prompt Pay Act legislation remained “just a bill” in 2024, like the forlorn character in the Schoolhouse Rock video. And Michigan therefore continues, as of this writing, to be one of the minority of states with no Prompt Pay legislation in the private sector.
