New Anti-Wage Theft Law with Real Teeth Starts to Take a Bite out of Wage Theft in Construction

In our March eNews, we wrote about filing suit on behalf on Tomas and Matthew.* Tomas and Matthew worked for a small construction labor contractor, who hired them to perform manual labor on a general contractor’s projects. After a few months of work, their paychecks started bouncing, and then the boss started avoiding them. Ultimately, they were left unpaid for months of work.

When we last updated you on their case, we were hopeful about the impact that a law we worked hard to pass in 2013 might have on their case. And we are excited to announce that we were right!

HB 2977 amended an existing law that protected farm and forestry workers to also include the construction industry. This law, called the Oregon Contractor’s Registration Act (OCRA) now requires lower level construction contractors—those that supply workers but don’t provide building materials or heavy equipment and don’t take out the building permit—to get a license from BOLI. (We call these contractors “labor brokers.”) To get a BOLI license the labor broker must post a bond, which unpaid workers would be able to tap to collect their wages. But labor brokers are notorious for flaunting the law - stealing wages, misclassifying workers as independent contractors, and then disappearing or running out of money before they can be held accountable. So what good does it do to add additional requirements for them to ignore?

The real lynchpin of HB 2977 is that it makes construction contractors who knowingly use unlicensed labor brokers liable for the actions of the unlicensed contractor. So responsible construction contractors now have a choice: hire a licensed labor broker and know they are dealing with a quality operation, or, hire an unlicensed labor broker and risk having to pay the workers’ wages (and various other substantial statutory penalties) themselves if the broker fails to comply with the law.

Due to the recent slump in the construction field, compliance with the law has been slow to catch on. But this fall we were able to secure a sizeable recovery from the general contractor who contracted with the unlicensed labor broker who hired Tomas and Matthew. With this settlement, we won justice for Tomas and Matthew. But just as importantly, we were also able to begin the process of educating general contractors that hiring unlicensed labor brokers puts them at risk. Because nothing helps spread the word like a general contractor who finds himself holding the bag.

*Not their real names

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