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 Enacts New Law to Address Wage Theft in Construction

On June 9, 2025, Oregon Governor Tina Kotek signed into law the landmark SB 426 bill aimed at tackling the persistent issue of wage theft in the state’s construction industry. Set to take effect on January 1, 2026, this new legislation holds owners and general contractors accountable for any unpaid wages owed to lower-tier subcontractors on most private construction projects. This move has been met with both support and criticism from various factions within the industry.

The Core Provisions of SB 426

One of the key features of SB 426 is that it imposes strict liability on project owners and direct contractors regarding unpaid wages. This means that these parties can be held legally responsible for ensuring that not only their employees are paid, but also those working for subcontractors, regardless of whether the owners or general contractors directly compensated those subcontractors. Additionally, owners and direct contractors may also be held liable for contributions to fringe benefits, interest on unpaid wages, penalty wages, damages, and even attorney fees, making it a significant shift in how liability is handled in the construction sector.

Penalty wages could amount to as much as 30 eight-hour days of pay for each employee affected. This provision serves as a strong incentive for owners and contractors to ensure that wages are paid promptly and correctly. Moreover, workers can pursue claims for unpaid wages within two years from the date the wages were due, providing them a window in which they can act if their rights are not honored.

Defining Key Roles and Responsibilities

SB 426 clearly defines the roles of owners, direct contractors, and subcontractors to ensure all parties understand their responsibilities under the new law. While the legislation does offer certain exemptions for small residential and commercial projects, it applies broadly to various construction undertakings within the state.

Furthermore, first-tier subcontractors are now required to provide certified payroll records when requested. Failing to do so may leave them liable for unpaid wages owed to their workers, putting the onus on them to maintain transparency within the wage payment process.

Legal Protections and Industry Concerns

The new law also invalidates any agreements that seek to waive or indemnify owners or general contractors from their assigned liability under SB 426. This clause aims to prevent loopholes that could undermine the protections afforded to workers in the industry. However, not everyone is on board with the changes. Some construction associations have expressed concerns that the law will dissuade owners and contractors from hiring new subcontractors due to the increased liability attached to wage payment issues.

Critics argue that the legislation unfairly shifts the burden of responsibility onto parties who do not have direct control over subcontractor pay practices. They fear that this could lead to a more cautious approach to hiring, ultimately impacting the dynamics of the construction workforce.

Advocacy and Support for Wage Rights

Conversely, supporters of SB 426 believe that the legislation will serve as a catalyst for positive change. By increasing the stakes for owners and general contractors to hire reputable subcontractors and ensuring workers receive fair compensation for their labor, they argue that the law promotes a healthier and more responsible construction industry.

The bill successfully made its way through the Oregon Legislature, passing the Senate with an 18-11 vote in April 2025, garnering support from various labor organizations and advocates focused on wage rights. As the implementation date draws closer, all eyes will be on the construction industry to see how this transformative legislation will unfold and its influence on wage theft practices in Oregon.

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