Missouri’s Prompt Pay Act Provides for Simple Interest as Penalty for Failure to Pay

After more than twelve years of litigation and three appeals, the Missouri Court of Appeals–Eastern District clarified a critical issue under Missouri’s Prompt Pay Act: the statute authorizes only simple interest, not compound interest. In Penzel Construction Co., Inc. v. Jackson R-2 School District, the court held that Section 34.057’s provision for a 1.5% monthly penalty applies solely to the principal amount withheld in bad faith. The appellate court concluded that the trial court erred by requiring compound interest, reaffirming that the statute’s plain language reflects a penalty designed to encourage prompt payment—not an authorization for interest on interest.