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On June 30, the Supreme Court of Tennessee issued an opinion interpreting the retainage provisions in Tennessee’s Prompt Pay Act (the Act). The opinion has significant implications for construction projects across Tennessee. Under the Act, a party withholding retainage from payments made to a contractor for construction work is required to deposit the withheld retainage into a separate, interest-bearing, escrow account with a third-party. Failing to follow this requirement is a Class A misdemeanor, subject to a $3,000 fine and, at the time the project in question began, a separate $300 civil “penalty,” for each day retainage is not properly held.