A proposal to crack down on wage theft in Oregon’s construction industry has sparked debate among lawmakers, contractors, and labor advocates, as Senate Bill 426 moves through the state legislature.

The bill, which passed the Oregon Senate in April with an 18-11 vote, seeks to hold general contractors “jointly and severally liable” for unpaid wages owed by their subcontractors and labor brokers to nonunion workers. The measure is now under review in the Oregon House Committee on Labor and Workplace Standards.

Supporters argue the legislation is necessary to curb widespread wage theft, while opponents warn it could have unintended consequences, including discouraging contractors from hiring emerging subcontractors.

Contractors and lawmakers critical of the bill voiced concerns during a committee hearing Wednesday. “I’m kind of offended, frankly, by this approach,” said Rep. Ed Diehl, a Salem Republican with experience commissioning construction projects. “It would put me liable for something I have no control over, and it would change my behavior. I would definitely not be reaching out to new startups.”

Khanh Tran, policy director for the Oregon chapter of the National Association of Minority Contractors, echoed Diehl’s concerns, cautioning that the measure would stifle opportunities for smaller firms. “This bill specifically disincentivizes hiring new contractors,” Tran said.

At the heart of the bill is the aim to ensure workers receive fair pay for their labor. Bill sponsor Sen. Floyd Prozanski, a Eugene Democrat, defended the proposal before the committee. “It is time to make certain that the men and women who do the work get paid for the work that they do,” Prozanski said.

According to state officials, many instances of wage theft involve informal labor brokers operating outside regulatory oversight. While Oregon law requires labor brokers to be licensed, only two licensed brokers are currently registered with the state, said Josh Nasbe, legislative director for the Oregon Bureau of Labor and Industries. He estimated that “hundreds” of unlicensed brokers are active in Oregon’s construction sector.

Supporters argue that holding general contractors accountable would encourage them to vet and hire reputable, licensed subcontractors rather than relying on risky, unlicensed brokers. “Contractors don’t have any incentive to hire licensed, bonded and responsible subcontractors,” said Hank Kaplan, a board member of the Jewish Federation of Greater Portland. “This legislation would provide that incentive.”

Legal advocates also highlighted the limitations of current enforcement mechanisms. “Current protections aren’t enough,” said Martha Sonato, a lobbyist with the Oregon Law Center, noting that existing legal avenues for recovering unpaid wages are often “too slow and complicated.”

Opposition to the bill extends beyond contractors. Molly McGrew, a lobbyist for the landlord group Multifamily NW, warned the measure could lead to project delays. “It will only lead to disputes that delay housing projects,” McGrew said.

However, the Oregon Department of Justice views the bill as a useful step toward addressing wage theft. Leslie Wu, an advisor to Attorney General Dan Rayfield, expressed support for the legislation’s potential to enhance enforcement efforts. “Attorney General Dan Rayfield would welcome ‘another tool in the toolbox’ to combat wage theft,” Wu said.

As the bill advances through the House, stakeholders across the construction industry remain divided over its potential impact. While advocates say it will promote fairness and accountability, critics fear it may increase legal exposure and discourage collaboration with small or new subcontractors.

If signed into law, SB 426 could reshape hiring practices and liability standards for Oregon’s construction sector, with implications for both worker protections and project management.

Originally reported by Chuck Slowthower in DJC Oregon.