Lawmakers Want Property Owners and General Contractors to Take Responsibility for Construction Wage Theft

CHIEF SPONSOR: Sen. Floyd Prozanski (D-Eugene)

WHAT IT WOULD DO: SB 426 aims to hold both property owners and general construction contractors jointly and severally liable for unpaid wages. The bill would allow workers who have been stiffed—or the Oregon Department of Justice on their behalf—to sue the general contractor or the owner of a project, rather than just a subcontractor who might have hired them.

PROBLEM IT SEEKS TO SOLVE: Wage theft, i.e., not paying people for the work they’ve done, is rampant in the construction trades, according to the Oregon Bureau of Labor & Industries. Right now, workers depend on BOLI, which is understaffed and ineffective at collecting unpaid wages, to seek justice on their behalf. SB 426 seeks to place greater responsibility on the people who most benefit from workers’ labor—the general contractors and owners of projects.

WHO SUPPORTS IT: Prozanski has five co-sponsors and backing from a host of labor organizations, including Carpenters Locals 541 and 503, the Oregon & Southern Idaho District Council of Laborers, and the AFL-CIO of Oregon, as well as the Oregon Center for Public Policy and many social justice organizations. Proponents say it’s time to shift the balance of power.

“Engagement of layers upon layers of contractors, subcontractors and labor brokers incentivizes wage theft in the construction industry by favoring inexpensive subcontractors, including those who cut costs by denying workers their legally earned wages,” testified Kate Suisman of the Northwest Workers’ Justice Project. “Contractors and other key stakeholders in the contractual chain hold significant market power and uniquely positioned to influence the behavior of subcontractors.”

WHO OPPOSES IT: Associated General Contractors Oregon-Columbia Chapter, whose members would be on the hook for the actions of dishonest subcontractors; the Oregon Home Builders Association; and Multifamily NW, which represents the owners of 300,000 apartments. Multifamily’s lobbyist, Zach Lindahl, testified that SB 426 “unfairly shifts liability onto owners and developers who have no direct control over subcontractor payroll practices. Expanding this responsibility not only creates an unpredictable legal risk for housing providers but also discourages new investment in housing at a time when Oregon is struggling with a severe housing shortage.”

Opponents say the answer instead is to increase BOLI’s budget so the agency can police workplaces, including cracking down on crooked labor brokers and deadbeat contractors.

WHAT HAPPENS NEXT: The bill got a public hearing Feb. 27 before the Senate Judiciary Committee—which is chaired by Prozanski and includes another co-sponsor, Sen. James Manning (D-Eugene). It’s scheduled for a work session in front of the same panel March 12.

This story was produced by the Oregon Journalism Project, a nonprofit newsroom covering rural Oregon.