Update Applicable to:	Effective Date
All Covered Owners, Direct Contractors, and Subcontractors at any Tier	January 1, 2026

What happened?

On June 9, 2025, Oregon Governor Tina Kotek signed Senate Bill 426 into law, establishing strict wage liability protections for construction workers.

Overview:

Property owners and direct contractors in Oregon will be jointly and severally liable for unpaid wages, fringe benefits, and penalties owed to unrepresented employees (those not covered by a qualifying union agreement) of contractors and subcontractors at any tier.

Summary of Provisions:

• Who Is Covered: Unrepresented employees, their authorized representatives, or the Oregon Attorney General may file civil actions to recover unpaid compensation.

• Who May Be Sued: Owners, direct contractors, and subcontractors at any tier.

• Recoverable Items: Unpaid wages, fringe benefits, interest, penalty wages, damages, attorney fees, and legal costs.

• Statute of Limitations: Claims must be filed within two years of when wages or benefits became due.

• Notice Requirement: Before suing, a written notice must be sent via certified mail. Owners and contractors have 21 calendar days to correct the violation.

• Employment Presumption: Workers are presumed to be employees unless proven to be independent contractors under Oregon law.

• Invalid Indemnification: Contracts cannot waive or shift liability from owners or contractors to others.

Additional Information:

Transparency & Compliance: Subcontractors must provide, upon request:

• Certified payroll records.
• Worker classifications.
• Contact information.
• List of lower-tier subcontractors.
• Contract start dates and durations.
• Affidavits disclosing past wage law violations.

These records must also be shared with authorized third-party representatives of unrepresented employees. Failure to provide records does not relieve liability.

Withholding Rights: Owners and direct contractors may withhold payments to subcontractors:

• If records are not provided.
• If they have already paid wages owed on behalf of the subcontractor.

Exemptions: The law does not apply to:

• Projects involving an owner’s principal residence.
• Projects with five or fewer residential or commercial units on a single tract.
• Public agencies and financial institutions that acquire property through foreclosure (if they do not direct construction).

Contract Updates & Risk Mitigation

• Contracts should include:
  • Mandatory payroll submission clauses
  • Affidavit requirements regarding past wage violations
  • Right to withhold payments for non-compliance or direct wage payments

• Indemnification waivers are explicitly invalid under SB 426.
• Consider requiring payment bonds from subcontractors.
• Expect increased administrative burden due to recordkeeping and payroll verification.

Source References

• Oregon SB 426 – Relating to wages

Resources

• BOLI – Resources

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