91视频

Summer is now in full swing, which means it is time to unpack the Oregon Legislature鈥檚 recent changes to employment laws. This year, we saw the arrival of a particularly relevant law for building industry professionals that may impact the way they think about the interaction between contractors and subcontractors.

On June 9, Gov. Tina Kotek signed Senate Bill 426 into law. It establishes liability for property 鈥渙wners鈥� and 鈥渄irect contractors鈥� for unpaid wages and fringe benefits of employees who work under them or on their projects. This liability extends to the employees of subcontractors, even if the owner or direct contractor has no supervision or control over their work or wages. The law will take effect on Jan. 1, 2026.

The law defines an 鈥渙wner鈥� as 鈥渁ny person, firm, partnership, corporation, association, company, organization or other entity, or any combination thereof, with an ownership interest 鈥︹�� in a property. A 鈥渄irect contractor鈥� is 鈥渁ny person, including a construction manager, joint venture or any combination thereof, the person鈥檚 successors, heirs or assigns, that enters into a construction contract with an owner.鈥�

The obligations of the new law do not apply to property owners who are hiring contractors to work on their primary residence, small projects involving five or fewer residential or commercial units on a single tract of land, public agencies, or those who acquire property ownership by foreclosure and do not undertake more than the work necessary to preserve or secure the property.

Only 鈥渦nrepresented employees鈥� who are not represented by a construction trade labor organization or those who are not covered by a collective bargaining agreement that contains specific provisions are eligible to recover under the law. Also included is a 鈥渞ebuttable presumption鈥� of employment, meaning the worker is assumed to be an employee rather than an independent contractor, and it is the employer鈥檚 burden to prove otherwise.

For employees, the new law provides extra protection in addition to remedies currently available, such as filing a complaint with the Oregon Bureau of Labor and Industries (BOLI), payment bonds, mechanic鈥檚 liens, and remedies through the Construction Contractors Board. If an employee has not been paid, the employee can take action against not only their employer, but also the businesses or persons who contract with their employer over the course of a project. The objective is to allow employees of contractors and subcontractors to seek payment from those who have ultimately benefited from their work when they have not been paid by their direct employer.

For employers, specifically property owners and general contractors, this creates another layer of liability. If subcontractors working on the project have not paid their workers, the workers can recover wages from the owner or general contractor, even if the owner or general contractor has already paid the subcontractor for their work. SB 426 specifically includes a provision stating that agreements to waive or release or to indemnify an owner or direct contractor are invalid.

While the new law specifically includes a provision stating that owners and direct contractors cannot contract out of liability, it does provide some safeguards that can minimize exposure. Specifically, there is a complaint and recovery process that must be followed before legal proceedings can begin. First, the person seeking to recover wages must send notice of the alleged violation to the owner or direct contractor via first-class certified mail. The notice must include a description of the violation and the nature of the claim. The notice must state that the owner and direct contractor have 21 days from the delivery date to correct the violation. Finally, the new law limits the time frame within which an employee can bring a claim to two years from the date the wages became due, which is shorter than the typical time frame of six years for unpaid wages.

Another protection that owners and contractors can utilize is the new law鈥檚 records and disclosure requirement. Upon request, subcontractors are required to provide information including but not limited to certified payroll reports, contact information, any subcontractors the direct contractor has hired, and names of all workers who have performed work on the project.

Though SB 426 does not allow owners and direct contractors to waive liability, the new law is silent on the ability to recover through action against the subcontractor that failed to pay wages. In lengthy or ongoing construction contracts, owners and general contractors may consider the actions they can take to limit their exposure going forward.

The new rules imposed by SB 426 may seem daunting for owners and contractors, but with regulation and internal changes, compliance can be achieved and liability minimized.

Hannah LaChance is an attorney with Barran Liebman LLP. She advocates for businesses, nonprofit organizations and schools as they navigate complex legal challenges and develop strategic compliance plans. Contact her at 503-276-2112 or聽[email protected].

Xavie Davenport is a law clerk with Barran Liebman LLP. She supports attorneys with content development for employment training, policy drafts, and legal research. Contact her at 503-276-2130 or [email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the authors and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither author nor the 91视频 guarantees the accuracy or completeness of any information published herein.