Construction Law Alert: Proposed Legislation Would Make Contractors Liable for Unpaid Wages of Subcontractors

A bill proposed in the Oregon House of Representatives threatens to fundamentally alter the relationships between owners, contractors, their subcontractors, and their subcontractors’ employees. Under the bill, a contractor (defined as a person who contracts with an owner to perform construction) on a private project would be directly liable for the unpaid wages of its subcontractors’ employees. This liability would extend to employees of subcontractors at all tiers, and it would include liability for any benefit payments or contributions made as part of the employee’s total compensation. The contractor’s liability could be enforced by the Bureau of Labor and Industries, any third party owed a benefit payment or contribution on behalf of the unpaid employee, or any joint labor and management committee established under a collective bargaining agreement.

The bill provides a few minor protections for contractors. It requires subcontractors to provide payroll records and information describing payment status. Although it allows a contractor to withhold payment to a subcontractor because of the subcontractor’s failure to comply with a contractor’s information request, it does not allow a contractor to avoid liability to the subcontractor’s employees for unpaid wages based on the subcontractor’s failure to comply with such a request.

This legislation is currently pending in the House Business and Labor Committee, and we urge you to contact your representative to share your comments regarding the impact this legislation could have on your business.