Bill of the Week: Senate Bill 426

WHAT IT WOULD DO

‍Senate Bill 426 seeks to hold both property owners and general contractors accountable for unpaid wages in the construction industry. If passed, the bill would allow workers or the Oregon Department of Justice to take legal action against either the general contractor or the property owner if wages remain unpaid, rather than relying solely on subcontractors who may have hired the workers directly.

PROBLEM IT SEEKS TO SOLVE

‍Wage theft in the construction industry is a serious and widespread issue, according to the Oregon Bureau of Labor & Industries (BOLI). Workers are often forced to rely on BOLI, an understaffed and underfunded agency, to recover unpaid wages, which many argue is ineffective. Senate Bill 426 aims to shift the responsibility to the parties who benefit most from the labor—general contractors and property owners—by making them jointly and severally liable for the wages owed to workers.

SUPPORTERS OF THE BILL

‍Senator Floyd Prozanski, the bill’s primary sponsor, has gained support from several key labor organizations, including Carpenters Locals 541 and 503, the Oregon & Southern Idaho District Council of Laborers, and the AFL-CIO of Oregon. Additionally, social justice groups like the Oregon Center for Public Policy are backing the proposal. They argue that the current structure incentivizes wage theft and disproportionately affects workers.

Kate Suisman, of the Northwest Workers' Justice Project, explained, “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. Contractors and other key stakeholders in the contractual chain hold significant market power and are uniquely positioned to influence the behavior of subcontractors.”

Supporters say SB 426 will provide workers a better chance of holding the powerful entities accountable for wage theft, shifting the balance of power toward the workers who deserve the pay they earned.

OPPONENTS OF THE BILL

‍The bill has faced opposition from industry groups like the Associated General Contractors Oregon-Columbia Chapter, the Oregon Home Builders Association, and Multifamily NW, which represents apartment owners across Oregon. These groups argue that holding property owners and general contractors liable for subcontractors’ actions is unfair, particularly when they have limited control over subcontractor payroll practices.

Zach Lindahl, a lobbyist for Multifamily NW, 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 suggest that the real solution lies in bolstering the BOLI’s budget to enhance its ability to investigate and enforce wage theft claims and crack down on dishonest contractors and labor brokers.

WHAT HAPPENS NEXT

‍The bill had its public hearing on February 27 before the Senate Judiciary Committee, which is chaired by Senator Prozanski. The committee also includes Sen. James Manning (D-Eugene), one of the bill’s co-sponsors. The bill is scheduled for a work session on March 12, where further discussions will take place. If approved, it could be a critical step forward in addressing wage theft in the construction industry in Oregon.

Expanding the Discussion: The Broader Impacts on Construction and Workers’ Rights

While the primary focus of SB 426 is to address wage theft, it also brings attention to a broader issue in the construction sector: the power imbalance between workers, subcontractors, and those who own and manage construction projects. By holding contractors and property owners accountable, proponents of the bill aim to encourage greater responsibility and fairness throughout the supply chain.

This bill is part of a larger movement to ensure that the rights of workers in industries prone to exploitation are better protected, and that those benefiting most from their labor are held accountable for fair treatment. Advocates argue that this approach could not only reduce instances of wage theft but also help workers receive the compensation they are owed without relying on an overwhelmed state agency.

A Changing Landscape for Construction Industry Accountability

Should SB 426 pass, it may serve as a model for other states facing similar challenges in the construction industry. By setting a precedent for holding high-level stakeholders accountable for wage theft, the bill could encourage additional legislative action to safeguard workers’ rights nationwide. The outcome of this bill could set a significant benchmark for how wage theft is addressed in construction projects across the U.S.

Originally reported by Nigel Jaquiss in Willamette Week.