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On April 12, the Oregon House passed a bill that would hold certain employers responsible for the illegal activity of other employers – even if they had no knowledge of the activity. That bill, HB 2057A, is now in the Senate, where its passage would raise constructions costs while creating obstacles to small and emerging businesses.

HB 2057A would make general contractors liable for the failure of subcontractors to pay wages owed to their employees. The bill is an attempt to address wage theft. However, as OBI’s Derek Sangston told the Senate Committee on Labor and Business April 27, current law prohibits such behavior. And any affected employee already may sue a subcontractor who fails to pay his or her wages. That employee also can file a complaint with the Bureau of Labor and Industries and receive compensation.

HB 2057A would be problematic enough if it were nothing more than a solution to a problem that already has multiple solutions. Unfortunately, its passage would create entirely new problems.

One such problem, Sangston explained, is litigation. By making general contractors liable for wages not paid by subcontractors, HB 2057A would encourage lawsuits, raising the cost of construction while doing nothing to ensure timely wage recovery.

Another problem would be felt by small and emerging businesses. Making general contractors responsible for the pay practices of subcontractors would incentivize them to engage only subcontractors with which they have existing relationships. Subcontractors trying to break into the construction industry would face even more difficulty.

For these reasons, it’s opposed by more than a dozen groups, including the National Association of Minority Contractors Oregon, the Independent Electrical Contractors of Oregon and LatinoBuilt.

Read Sangston’s full testimony here.