Oregon Enacts SB 426 to Address Wage Theft in Construction

News Summary

Oregon’s Governor has signed the SB 426 bill into law, aimed at combating wage theft within the construction industry. The legislation establishes clear responsibilities for owners and general contractors regarding unpaid wages owed to subcontractors. Additionally, it allows workers to sue directly for unpaid wages, thereby promoting transparency and accountability. While the bill is supported by labor advocates, some industry players express concerns about its potential impacts on hiring practices. As the law prepares to take effect, stakeholders must adapt to the new regulations.

Oregon Takes a Stand Against Wage Theft in Construction with New Law

On June 9, 2025, Oregon Governor Tina Kotek officially signed into law SB 426, a significant measure aimed at combating unpaid wages and addressing wage theft within the construction industry. The law, which will become effective on January 1, 2026, represents careful consideration and ongoing efforts by the Oregon Legislature to implement stronger protections for construction workers.

A Comprehensive Approach to Wage Theft

SB 426 introduces a strict liability framework that holds both owners and general contractors accountable for any unpaid wages owed to lower-tier subcontractors engaged in most private construction projects. This means that if workers do not receive their wages, they can directly sue the owners or general contractors, regardless of whether those parties had already paid the subcontractor responsible for employment.

The implications of this new law extend beyond just recovering unpaid wages. Owners and direct contractors may also be required to cover fringe benefit contributions, interest, penalty wages, damages, and even attorney fees, thereby increasing their financial responsibility in ensuring that workers are compensated correctly.

Defining Associated Responsibilities and Penalties

In addition to establishing liability principles, the bill outlines that penalty wages can accumulate up to 30 eight-hour days of wages for each employee affected by unpaid wages. Furthermore, workers must submit their claims for unpaid wages within two years from the date those wages were due, creating a specific timeframe for workers to seek accountability.

Clarifications and Exemptions

SB 426 offers definitions for key terms such as owners, direct contractors, and subcontractors to ensure clarity in the law’s implementation. It is important to note that some small residential and commercial projects are exempt from this law, allowing certain small-scale operations to maintain flexibility while still operating within the legal framework.

To enhance compliance, first-tier subcontractors are now mandated to provide certified payroll records when requested by either owners or direct contractors. If they fail to furnish these records, they may remain liable for unpaid wages owed to their employees, thereby emphasizing the need for transparency and accountability in hiring practices.

Invalidating Risk-Transfer Agreements

The new law also invalidates any agreements that aim to waive or indemnify owners or direct contractors from the liabilities assigned under SB 426. This move is intended to prevent parties from shirking their responsibilities and ensure workers have a clear avenue for recourse.

Industry Reactions: Support and Opposition

The passage of SB 426 was marked by significant debate. Supporters, including various labor organizations and advocates for wage rights, argue that the legislation will foster an environment where employers feel incentivized to hire reputable subcontractors and ensure timely payment for workers. They believe that securing workers’ rights can lead to a more ethical and fair construction industry.

Conversely, opponents, primarily from construction associations, argue that the law disproportionately shifts responsibility to parties who may have limited control over the practices of subcontractors. They express concerns that this legislation could deter the hiring of new subcontractors, potentially disrupting industry dynamics and contributing to a more cautious hiring environment.

Looking Ahead

As SB 426 prepares to take effect in just a year, stakeholders across the construction industry will need to adjust to these new standards. The law aims to address wage theft more effectively, but the ongoing dialogue around its impact will surely shape the construction landscape in Oregon for years to come.

Deeper Dive: News & Info About This Topic

Additional Resources

• DJCOregon: Oregon Construction Wage Theft Bill SB 426
• Wikipedia: Wage Theft
• Willamette Week: Lawmakers and Construction Wage Theft
• Encyclopedia Britannica: Labor Law
• NFIB: Stand Up for Law-Abiding Property Owners