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’s New SB 426 Law Tackles Wage Theft in Construction

On June 9, 2025, Oregon Governor Tina Kotek signed the significant SB 426 bill, which aims to combat wage theft in the construction industry. The legislation is set to take effect on January 1, 2026, marking a pivotal shift in how wages are handled within the state’s construction sector.

New Accountability for Unpaid Wages

SB 426 introduces strict liability for owners and general contractors regarding unpaid wages owed to lower-tier subcontractors on most private construction projects. This means that employees now have the right to directly sue owners or general contractors for unpaid wages, regardless of whether those parties have paid the subcontractors. This is a significant development aimed at ensuring that all workers receive the compensation they are owed.

Additional Liabilities and Penalties

The law also stipulates that owners and direct contractors could be liable for more than just unpaid wages. They may also face costs related to fringe benefit contributions, interest, penalty wages, damages, and attorney fees. Notably, penalty wages could reach up to 30 eight-hour days of wages per employee if claims for unpaid wages are upheld. Employees can file claims for unpaid wages within two years from the date those wages became due.

Streamlined Payroll Records

Under SB 426, first-tier subcontractors are required to provide certified payroll records when requested by owners or direct contractors. Failure to do so may result in continued liability for any unpaid employee wages, adding another layer of responsibility within the construction industry’s payroll process.

Provisions for Exemptions

The law does feature exemptions, specifically for small residential and commercial projects, acknowledging that not all construction ventures entail the same level of complexity or financial commitment. This nuanced approach aims to balance the need for stringent wage protections with the operational realities faced by smaller projects.

Impact on Subcontractor Hiring

Legislative Support and Opposition

The passage of SB 426 was not without controversy. The bill advanced through the legislative process with an 18-11 vote in the Senate, receiving strong backing from labor groups and advocates championing for fair wages. However, various construction associations have voiced their objections, stating that it shifts liability unfairly onto parties who do not have direct control over subcontractor practices. This ongoing debate highlights the tension between ensuring worker protections and maintaining a vibrant, flexible labor market in the construction sector.

Conclusion

With the imminent arrival of SB 426, stakeholders in Oregon’s construction industry face new responsibilities and potential liabilities. As the law is set to take effect in early 2026, its long-term implications for wage theft, subcontracting practices, and overall industry health remain to be seen. The move is a significant step in the state’s ongoing efforts to protect worker rights and ensure fair compensation across the board.

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