The Oregon Legislature approved a bill that makes contractors and property owners liable when a subcontractor doesn’t pay its employees.
Proponents of the bill say some subcontractors are getting work by making extremely low bids that only pencil out if they don’t pay their workers. Senate Bill 426 will both get workers compensated when shady bosses don’t pay up and incentivize contractors to partner with reputable subcontractors.
Business owners who operate above board and don’t use a “business model of wage theft for profit” won’t be impacted by the law, said Western States Regional Council of Carpenters lead representative Trampas Simmons.
The new law will apply to work performed after Jan. 1, 2026. When a subcontractor doesn’t pay an employee, that employee can demand payment from the direct contractor (also commonly referred to as a prime contractor or general contractor) or from the property owner. If the direct contractor or property owner doesn’t pay up within 21 days, the employee can file a lawsuit to get their unpaid wages and benefits.
Property owners or direct contractors who pay up can file a civil lawsuit against the subcontractor to recover that money.
The law only applies to employees who aren’t under collective bargaining agreements that have agreed-upon systems for recovering unpaid wages.
The initial version of the bill made individual homeowners liable, so even an individual with no knowledge of construction industry processes and regulations could be on the hook for thousands of dollars if their home renovation involves an unscrupulous contractor. The final bill doesn’t apply to property owners hiring a contractor for work on their primary residence or a building with five or fewer units.
SB 426 first passed the Senate 18-11 on April 9; then the House passed an amended version 31-26 May 28 and the Senate ratified that in a 17-12 vote May 29.
The Oregon State Building and Construction Trades Council, Oregon AFL-CIO, and members of Carpenters Local 503 and Local 541 supported the bill, as well as the Oregon Law Center, Oregon Attorney General Dan Rayfield, and Northwest Workers’ Justice Project.
More than 200 individuals and groups submitted written testimony on the bill, with around a quarter in opposition.
Opponents included the National Association of Minority Contractors, Associated General Contractors, Latino Build, real estate groups, and construction companies. Latino Build and other critics said the bill would increase construction costs and reduce competition because contractors would avoid working with newer, smaller subcontractors and labor brokers in order to reduce risk.
HOW THEY VOTED
The bill passed mostly along party lines, with Democrats in support, except that in the House, Republican Greg Smith voted for it and Democrats Shannon Isadore, John Lively, Daniel Nguyen, and Mari Watanabe voted against it.
