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A bill that threatens to ban limited liability companies that fail to pay prevailing wage on public construction projects sailed through the Senate Business and Transportation Committee on Monday.

However, that doesn’t mean House Bill 2545 is not controversial.

While it was passed unanimously by the Business and Labor Committee on March 12, it ran into sharp partisan debate when it reached the House floor two days later. Only eight of the House’s 26 Republicans voted in favor of the bill; the final vote before it moved to the Senate was 39-18.

The bill now is moving to the Senate floor, having again gained unanimous consent in committee. State Sens. Fred Girod of Stayton and Bruce Starr of Hillsboro – the Business and Transportation Committee’s only two Republicans – joined in Monday’s unanimous do-pass recommendation.

The bill permits the commissioner of the Bureau of Labor and Industries to ban contractors and subcontractors (working under limited liability companies) from public construction contracts if the parties:

• Fail to pay or post prevailing wage;

• Fail to pay subcontractors’ workers prevailing wage when the contractors pay employees on the subcontractors’ behalf;

• Falsify information on the contractor’s or subcontractor’s certified statements.

During the debate on the House floor, Republicans argued that the bill is an unwelcome and unnecessary intrusion into decisions that should rightly be made by private companies according to free market forces.

However, representatives from workers’ organizations said the bill closes a gaping loophole in state law.

“The statutes addressed in HB 2545 were written before LLCs existed, and the increasing prevalence of LLCs in the construction industry necessitates this change,” Frank Wall, executive director of the Plumbing and Mechanical Contractors Association of Oregon, testified on Monday before the Senate committee.

“This bill is a simple fix to add LLCs to the list of business entities in (Oregon Revised Statute) 279C.860 that can face debarment for certain violations of (prevailing wage) law,” he said. “We believe LLCs should be treated the same as every other contractor, subcontractor, firm, partnership or corporation under (prevailing wage) law.”