Matthew H. Mues | Davis Wright Tremaine
On May 29, 2025, Oregon Gov. Kotek signed into law SB 426 relating to unpaid wages of employees of contractors and subcontractors on construction projects in Oregon. This new wages law will be added to and made a part of ORS chapter 652.
This new wages law applies to all construction, reconstruction, alteration, maintenance, moving, or demolition projects, except those relating to an owner’s (as defined in the Act) principal residence or to real property consisting of five or fewer residential or commercial units on a single tract of land.
Pursuant to this new wage law, an owner[1] that enters into a construction contract with a direct contractor[2] shall be jointly and severally liable with the direct contractor for any unpaid wages, including fringe benefit contributions and penalties, owed to any unrepresented employee[3] of the direct contractor and any unrepresented employee of a subcontractor at any tier for labor performed on a project within the scope of the construction contract.
Either the employee or an authorized representative (as defined in the Act) of the employee may bring a civil action against an owner, a direct contractor or a subcontractor in court to recover such unpaid wages, as well as interest and penalty wages, damages, attorney fees and costs incurred in connection with the action. There is a rebuttable presumption that the person performing labor on a project within the scope of a construction contract is an employee.
There is a notice and cure requirement in the Act, pursuant to which a person must send written notice of the alleged violation by first-class certified mail to the owner and direct contractor of the alleged violation prior to commencing a civil action. The owner and direct contractor have 21 days from delivery of the notice to correct the alleged violation.
Importantly, an owner and direct contractor cannot contract around the Act’s imposition of liability on them. The Act states that any “agreement to waive or release an owner or direct contractor or to indemnify an owner or direct contractor for liability assigned under [the Act] is invalid.”
A civil action under the Act must be commenced within two years from the date on which the wages and fringe benefit contributions became due.If you have questions relating to the Act, contract terms relating to it, or receive notice of a claim under the Act, please contact our government contracts and construction group.
[1] This new wages law broadly defines “owner” as “any person, firm, partnership, corporation, association, company, organization or other entity, or any combination thereof, with an ownership interest, whether the interest or estate is in fee, as vendee under a contract to purchase, as lessee or another interest or estate less than fee that causes: (i) A building, structure or improvement, new or existing, to be constructed, reconstructed, erected, altered, remodeled, repaired, maintained, moved or demolished; or (ii) Land to be excavated or otherwise developed or improved.” Section 2(1)(g)(A)(i)-(ii) of the Act.
[2] This new wages law defines “direct contractor” as “any person, including a construction manager, joint venture or any combination thereof, the person’s successors, heirs or assigns, that enters into a construction contract with an owner.” Id. at (2)(1)(d).
[3] The Act defines “unrepresented employee” as “an employee of a direct contractor or subcontractor” who is “(A) Not represented by a construction trade labor organization that has established itself or its affiliates as the collective bargaining representative for persons performing work on a project; or (B) Not covered by a collective bargaining agreement[.]” Id. at (2)(1)(i).
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