Retainage figures: 3 checks before subcontractor pay

• Check the public contract total before applying section 255.078.
• Compare withholding with the payment amount, not gross completed work.
• Record incoming payment requests and any corrections.
• Keep retainage release dates separate from payment-request dates.

Read this as general information, not legal advice. The figures below come from the 2025 Florida Statutes, and retainage rules differ from state to state. A number that holds in Florida may not hold where your job sits. Before you rely on any figure, open the link, read the full section, and check your own state's rules or ask a lawyer who knows your contract.

A typical public job has a simple chain. The owner pays the prime contractor, and the prime contractor pays its subcontractors and suppliers. Retainage is a layer in that chain. When the owner holds money back from the prime, the prime's cash is short, and that shortage is what makes the timing of subcontractor payments hard.

This post focuses on two points in the chain. The first is the owner-to-prime side, because that is where the statute sets its limits. The second is the prime's duty to pass retainage along once it has the money. If your office is the prime on a job, both points apply to you. If your office is a subcontractor on someone else's job, the first point still tells you what the owner may hold, and the second tells you what the prime is supposed to do with the money it receives.

Retainage also ties up cash you have already spent. The retained slice often comes back long after the crew has moved on, so the cash for that work is tied up for a while. Some firms handle that gap with a line of credit or with reserves from other jobs. Whatever your method, the retainage plan belongs in the job budget from the start, not in the month the check is due. Keep that plan alongside your job cost sheet.

Retainage is money the owner keeps back from each progress payment, usually to make sure the work is finished right. On public construction in Florida, the statute limits how much can be held. Under section 255.078, a public entity "may withhold from each progress payment made to the contractor an amount not exceeding 5 percent of the payment as retainage."

Three parts of that sentence matter for your office.

The first is that the cap applies to each progress payment. It is not a cap on the whole contract. Suppose a pay application covers a month's completed work. The most the owner can hold back on that application is 5 percent of that payment, and the rest is paid out. Across many applications the total held can grow, but each slice is measured against the payment it came from.

The second is that 5 percent is a ceiling, not a target. The statute says the owner "may" withhold up to that amount. An owner who holds back less is still inside the rule. So the figure to check is not whether the owner held exactly 5 percent. It is whether the amount held is more than 5 percent of the payment. If it is, the statute does not support it, and you should ask why before you pay anyone out of that check.

The third is that the rule carries through to your subcontractors. If a public entity pays retainage to the contractor that is attributable to the labor, services, or materials supplied by subcontractors or suppliers, the same section requires the contractor to pass that retainage along promptly. Keep a record of the date you paid.

A simple habit makes all of this easier to check. For each pay application, keep one line that shows four amounts: the gross earned, the retainage the owner held, the net you received, and each subcontractor's share of the retainage. With that line in front of you, the 5 percent test and the payment duty both take a minute to confirm instead of an afternoon of digging through emails.

Here is the check in practice. Take any pay application and find the payment amount on it. The ceiling is 5 percent of that payment. If the owner's statement shows a held amount at or below that ceiling, you are inside the rule. If it shows more, for example an amount above 5 percent of the payment, the statute does not support the excess.

Illustrative example: comparing the withheld share

On an illustrative covered job, an owner proposes holding 10 percent of a payment. Compare that with the 5 percent ceiling: the proposed share is twice the limit.

The 5 percent rule does not apply to every public job. Subsection (6) of the same section, in section 255.078, says the section "does not apply to any construction services purchased by a public entity if the total cost of the construction services purchased as identified in the contract is $200,000 or less."

Read that as a threshold test, and be exact about it. The line is $200,000, and the test is "or less." A contract at exactly $200,000 falls outside the section. A contract one dollar higher falls inside it. A small firm that is close to the line should not guess.

Two details deserve attention. First, the test looks at the total cost of the construction services "as identified in the contract." The number to check is the one stated in the public contract for the services purchased. It is not the dollar value of your own subcontract, and it is not the size of one invoice. Your subcontract may be well under $200,000 while the prime contract is well over it, or the reverse. Pull the contract and read the number yourself.

Second, check how change orders, add-alternates, or later amendments affect the total. If you are near the line, ask the owner's representative that question in writing and get an answer before you rely on either side of the threshold. A written answer is much easier to defend later than a memory of a phone call.

Here is what the threshold does to your payment work. Because the subsection says the whole section does not apply to a contract at or under $200,000, the 5 percent ceiling and the duty to pass along retainage that appear in that section do not apply under its own terms either. Suppose the public contract total sits just under $200,000. Under this section, the 5 percent test is not the test you run, whatever the owner withholds. That does not make your obligations to your subcontractors disappear. Your subcontract still governs what you owe and when. It means you should not assume the statute protects or constrains you the way it would on a larger job. Find out which rules, if any, do apply below the line before you set your payment schedule.

If the total cost of construction services identified in the public entity's contract is above $200,000, the section applies, and the 5 percent ceiling and the duty to pass along retainage both apply to your job. Treat them as the baseline. Ask the owner for a written retainage schedule, if one exists, that shows how much is held on each pay application and when it will be released, and keep that schedule with the contract. When the numbers in your pay application and the owner's statement do not match, you have a documented question instead of a guess.

The third figure comes from Chapter 715, in section 715.12. That section uses the number 14 twice. The two uses are different clocks, so keep them apart.

The first is the window to fix a payment request. The statute says: "If the request for payment is incomplete or contains an error, the obligor has 14 days within which to return the request for payment to the obligee for completion or correction." In that wording, the obligor is the party that has to pay, and the obligee is the party that asked to be paid. For your office, the practical meaning is this. If a subcontractor's payment request is missing something or contains an error, you have 14 days to send it back for correction. That gives you a defined time to hand back a flawed request, and it matters for the second clock.

Write down the date each request arrives, and check the full text of the section on how the count works before you rely on a particular day. A date you can prove is worth more than a date you remember.

A simple intake routine helps. When a request arrives, stamp it with the date received, compare it against the subcontract and the pay application it supports, and list anything missing or inconsistent. If you need to send it back, do it in writing, list every item you need, and keep the transmittal. If the question later is whether you returned it inside the window, you will have a record rather than a recollection. For related timing checks, see progress payment applications.

The second is the interest clock. The statute says that if the request is returned within the time allowed, "the time period for computing interest begins to run on the 14th day after the request for payment is completed or corrected and payment is otherwise due." So the interest period is tied to the date the corrected request is complete and payment is otherwise due. It is not tied to the date the first flawed request arrived.

The interest itself is set by a separate sentence in the same section. Interest runs at the rate described in section 55.03, plus an additional 12 percent a year, starting on the 14th day after payment is due pursuant to subsection (4). Read the whole section before you apply it to a particular invoice.

Here is how the two clocks might play out. Suppose a subcontractor's request arrives on a Monday and is missing a required signature. You send it back that same week. The subcontractor returns a corrected version three weeks later. Your record of the Monday still matters, because it shows you returned the flawed request inside the 14-day window.

Florida's lien statute, section 713.23, contains a 10 percent figure that is easy to confuse with the payment rules above. It says: "The failure of a lienor to receive retainage sums not in excess of 10 percent of the value of labor, services, or materials furnished by the lienor is not considered a nonpayment requiring the service of the notice provided under this paragraph."

A lienor is a party with a lien right, such as a subcontractor or supplier. The quoted sentence is about whether a retainage shortfall counts as nonpayment that requires a particular notice. It is not a rule that lets you hold back 10 percent of a sub's pay, and it is not a payment deadline. Treat it as a lien-notice question. Before you use it to decide anything about a subcontractor who has not been paid in full, check with counsel.

Subcontractors usually care less about the statute than about when the money arrives. A short, plain note to each sub at the start of the job helps. Say how you will handle retainage on their share, how you will handle payment requests, and what you need from them to keep the clock moving. If a request is going back for correction, tell the sub what is missing and why, in one list. Subs who know the rules in advance can send cleaner requests, and clean requests are the simplest way to avoid a dispute about a date.

• Confirm the prime contract's construction-services total before applying section 255.078's withholding cap and retainage payment duty.
• For each pay application, compare the retainage held to 5 percent of that payment. Anything above 5 percent on a covered job needs an explanation from the owner.
• Log the date every subcontractor payment request arrives.
• If a request is incomplete or wrong, send it back within 14 days, and keep proof that you sent it.
• Note the date the corrected request is complete, and calendar the 14th day after payment is due for the interest clock.
• When retainage comes in that belongs to a subcontractor's work, pay that subcontractor promptly, and record the date.
• Keep a one-line summary for each pay application: gross earned, retainage held, net received, and each subcontractor's share.

Florida is one example. The numbers here are Florida numbers, and they are not a national standard. Before you use any of them on a job, take three steps. Find the statute that governs public construction where the job sits. Read the full text of each section, not only the sentences quoted here. Then ask whoever handles your contracts, or a lawyer who knows your state, to confirm how the rules apply to your contract and your subcontractors.

Today, pull one current pay application and put its payment amount, withheld amount and request dates beside the contract for review.

Which contract should I pull for the threshold check?

Pull the public entity's construction-services contract. Keep it with the owner's statement so you can compare the documents without searching through emails.

What should I keep when returning a flawed request?

Keep the written return notice and its delivery record. Include the missing or inconsistent items in the same record, so the correction history stays together.

Where should I review related payment dates?

Use the Florida subcontractor payment deadlines guide alongside your contract review. Keep that review separate from the lien-notice question.