Oregon Contractors Face New Criminal Exposure for Wage Violations

Oregon has quietly rewritten the consequences for wage violations — and the change lands on January 1, 2027.

Oregon House Bill 4089 — passed during Oregon’s 2026 short legislative session and signed by Governor Tina Kotek on March 31, 2026 (Chapter 53, Oregon Laws 2026) — makes a set of changes that individually look like legal housekeeping. However, taken together, they add up to something general contractors ("GCs"), subs, and the people who run their payroll should understand before the law takes effect.

Here’s what changed, and what it means for you.

Underpaying a Worker Is Now Wage Theft in Oregon

Under Oregon's existing theft of services statute (ORS 164.125), obtaining labor with the intent to avoid paying for it was already a crime, and "labor" was already in the statute's definition of covered services. What HB 4089 changes is narrower, but meaningful. Here's the sentence it changes:

164.125. (1) A person commits the crime of theft of services if: (a) With intent to avoid full or partial payment therefor, the person obtains services that are available only for compensation, by force, threat, deception or other means to avoid full or partial payment for the services[1]

Three words, "full or partial," inserted twice. Today that sentence reads "with intent to avoid payment." Avoiding payment is the crime. On January 1, 2027, avoiding any part of the payment is the crime. Underpayment, not just total nonpayment.

That's the whole amendment, but it's enough, because the Legislature didn't have to write anything else. The penalties were already sitting there, graded by the aggregate value of the services taken:

• Under $100: Class C misdemeanor

• $100 to $999: Class A misdemeanor

• $1,000 or more: Class C felony (up to 5 years’ imprisonment, a $125,000 fine, or both)

• $10,000 or more: Class B felony (up to 10 years’ imprisonment, a $250,000 fine, or both)

ORS 164.125 covers labor, transportation, hotels, and restaurants. It's the statute Oregon uses to prosecute someone who walks out on a tab or stiffs a contractor for work already done. Those felony tiers were written for thieves, but they apply equally to contractors who short their workers. In other words, as of January 1, 2027, this applies to your certified payroll.

The felony thresholds sound distant until you do the math. The statute's existing aggregation rules allow individual underpayments to be added together: thefts against multiple victims by similar means within a 30-day period, or against the same victim within a 180-day period, can be combined into a single, higher charge. Five workers shorted $50 a day is $250 a day — about $5,250 across the working days in a single 30-day window, well past the Class C felony line. One worker underpaid $80 a day — roughly a $10-an-hour gap on an eight-hour shift — clears the $10,000 Class B threshold over a 180-day window on its own.

Now, here's the important nuance: prevailing wage violations don't automatically become criminal under this statute. The trigger is intent — knowingly and deliberately shortchanging workers. An honest classification error, a fringe benefit calculation that went sideways, a paperwork gap: those remain administrative compliance problems, not crimes. Lawmakers narrowed the bill during the session precisely because farm, restaurant, and homebuilder groups warned that the original draft would criminalize ordinary payroll mistakes.

But intent doesn't get settled by asking the contractor. It gets read out of the file: the wage determination in your project folder, the classification someone flagged in March, the error you fixed on one job and left running on another. And it only settles the crime. An honest mistake keeps you out of criminal court. But it doesn't keep you out of BOLI's office, off the hook for back wages, or out of a civil suit. Those never ask what you meant.

Criminal Penalties Stack; They Don’t Replace Civil and Administrative Ones

This is the piece that should get your attention:

Section 2 of HB 4089 makes explicit that a criminal prosecution under ORS 164.125 does not preclude an employee, an independent contractor, an authorized third party representative, or the BOLI Commissioner from commencing a civil action or administrative proceeding to seek wages, compensation, penalties, damages, or other remedies.

That's three tracks: (1) BOLI can pursue back wages and penalties, and on public works, debarment under ORS 279C.860; (2) workers can file civil suits, including the joint and several liability claims SB 426 opened against GCs; and (3) prosecutors can bring criminal charges.

The third one used to be theoretical. Theft of services reached total nonpayment, and no one charged it over a wage dispute. Starting January 1, 2027, it reaches underpayment, and Section 2 says out loud that it doesn't displace the other two. All three proceed at once.

[See also: Oregon SB 426: Your Sub Didn't Pay a Worker. Now It's Your Problem.]

BOLI, the DOJ, and the Department of Revenue Are Now Coordinating on Wage Theft

Section 3 of HB 4089 expands the mandate of Oregon’s Interagency Compliance Network, a body established under ORS 670.700 that includes: the Oregon Department of Justice, the Department of Revenue, the Employment Department, the Department of Consumer and Business Services, BOLI, the Construction Contractors Board (CCB), and the State Landscape Contractors Board. The new mandate: develop investigative methods to gather and share information relating to persons whose actions may constitute theft of services under ORS 164.125 and who do not comply with laws relating to taxation or employment.

One caveat worth knowing: an earlier draft would have required agencies to refer suspected wage theft directly to the Attorney General or a district attorney. That mandatory referral language did not survive into the enacted law. What passed is an information-sharing and investigative-coordination mandate, not an automatic criminal referral pipeline. The practical direction is still clear: the agencies that see wage data are now formally tasked with looking for wage theft together.

And the Department of Revenue is in that network. Wage theft and payroll fraud tend to travel together. When workers are underpaid off the books, the tax records often don’t match either. Revenue has an interest in pulling that thread, and the network’s new mandate expressly covers noncompliance with tax laws alongside theft of services.

If you’ve operated on Oregon public works projects under the assumption that enforcement means “BOLI sends a letter,” that assumption needs updating.

General Contractors and Subs Now Face Criminal Liability for Their Labor Contractors’ Licensing Status

Section 4 is the provision most GCs will overlook — and probably shouldn’t. It’s also the only place in HB 4089 that creates an entirely new crime.

HB 4089 amends ORS 658.991 to make it an offense for a direct contractor or subcontractor to knowingly enter into a contract with a construction labor contractor that’s required to be licensed under ORS 658.405 to 658.511 and isn’t. First offense: Class A misdemeanor (up to 364 days’ imprisonment, a $6,250 fine, or both). With a prior conviction under the same subsection: Class C felony (up to 5 years, a $125,000 fine, or both).

Note who “you” is here. HB 4089 borrows its definitions of “direct contractor” and “subcontractor” from ORS 652.197: the same statute SB 426 created to impose joint and several wage liability on GCs. If SB 426 put you on the hook for a sub-tier’s unpaid wages, HB 4089 uses that same definition to put you within reach of a misdemeanor.

Two clarifications matter.

1) A CCB-licensed contractor is not a construction labor contractor for this purpose. The enacted law excludes any person licensed under ORS chapter 701 from the definition. The provision targets unlicensed labor brokers, not your CCB-licensed subs.

2) Not every labor supplier is a construction labor contractor. ORS 658.405 defines the term broadly, covering entities that recruit, solicit, supply, or employ workers to perform construction labor for another. Staffing firms, temp agencies, and day labor operations can fall inside it. But the statute carves out several categories, including qualifying staffing agencies: those that supply workers to multiple clients under a client agreement, carry workers’ compensation coverage, and pay required employment and income taxes. The line isn’t obvious from a handshake and a certificate of insurance. Evaluate each labor-supplying vendor individually.

Due diligence on your labor contractors’ licensing status is no longer a nice-to-have. It’s a condition of your own legal exposure.

The Timing Is Not a Coincidence

January 1, 2027 is also the day Oregon’s six-month job site sweep opens.

HB 4012, passed in the same session and effective June 5, 2026, directs the CCB and BOLI to run a targeted assessment initiative from January 1 through July 1, 2027. During routine job site visits, CCB inspectors will screen for unlicensed labor contractors, and what they document can be shared directly with BOLI.

Read the two bills together and the shape of it is plain. HB 4012 is how they find it. HB 4089 is what they can do with it. The assessment window opens the same day the criminal liability attaches.

There’s a second-order problem in that pairing. Before the sweep starts, the CCB must send written notice to every ORS chapter 701 licensee spelling out the licensing requirements for construction labor contractors. After that notice lands, “I didn’t know I was supposed to check” becomes a much harder sentence to say out loud.

[See also: Oregon's Six-Month Job Site Sweep Starts January 1, 2027]

Misusing a Contractor’s License Number Is Now a Felony

One more provision worth a line item. Section 5 amends ORS 701.990 to elevate two offenses from Class A misdemeanors to Class C felonies: intentionally using a contractor’s license number without the licensed contractor’s authorization, and using a license number, with or without authorization, with intent to deceive the public. If a lower-tier entity is borrowing someone else’s license number to look legitimate, the person doing the borrowing is now committing a felony.

What This Means for Your Prevailing Wage Program

Almost nothing, if you’re doing the work. HB 4089 doesn’t touch what prevailing wage compliance looks like day to day. Wage determinations, certified payrolls, classifications, fringe documentation: all the same on January 2, 2027 as they were on December 31, 2026.

What changes is how a pattern looks from the outside. Intent is the whole ballgame under this statute, and intent gets proven with records. That puts three things on your list:

1. Fix errors fast, and write down that you fixed them. This is the big one. A misclassification you catch and correct in the next cycle looks like a mistake, because it is one. The same misclassification running untouched for six months looks like a decision. Your correction log isn’t housekeeping anymore. It’s the evidence that separates the two.

   
   

2. Escalate in writing. If you flag a rate question or a classification you can’t resolve, put it in an email and keep the thread. A company that asked and got it wrong is in a different position than a company that never asked.

   
   

3. Verify labor contractor licenses before the contract, not after. Under Section 4, this is the one place where a GC or sub can pick up criminal exposure without underpaying anyone at all. Check the license, keep the copy, and flow the requirement down to your subs.

Oregon’s multi-agency compliance network is now formally tasked with developing methods to identify wage theft, with tax enforcement cross-referencing and contractor licensing oversight running in parallel. BOLI was already conducting audits. Starting January 1, 2027, those audits run alongside a criminal statute that reaches underpayment and a job site sweep built to feed it.

The contractors most at risk aren’t the ones making honest mistakes. They’re the ones who’ve been getting away with it long enough to believe they’re just doing business.

Naylor Construction Consulting (NCC) works with GCs and subs across Oregon to build compliance programs that hold up before there’s a BOLI investigator on the other end of the phone. If you’re operating on Oregon public works projects and want to know where your exposure actually sits, reach out and we’ll take a look together.

Frequently Asked Questions

Does HB 4089 make all prevailing wage violations criminal in Oregon? No. HB 4089 amends the theft of services statute, ORS 164.125, which requires that a person obtain services with the intent to avoid full or partial payment for them. Intent is the trigger. Administrative prevailing wage violations, including classification errors, calculation mistakes, and paperwork failures, remain civil and administrative matters. Lawmakers narrowed the bill during the 2026 session specifically to keep ordinary payroll mistakes out of it.

What are the criminal penalties for wage theft under HB 4089? The tier structure is pre-existing under ORS 164.125 and runs from a Class C misdemeanor (under $100) to a Class B felony ($10,000 or more). HB 4089’s contribution is the clarification that partial payment counts, so underpayment, and not just total nonpayment, falls within the statute. Existing law also allows individual thefts to be aggregated: against multiple victims by similar means within 30 days, or against the same victim within 180 days. That can lift lower-dollar violations into felony territory.

Can a contractor face both criminal charges and a BOLI investigation for the same violation? Yes. Section 2 of HB 4089 explicitly preserves civil and administrative remedies alongside criminal prosecution. A contractor can simultaneously face criminal charges, back wage orders and penalties from BOLI, and civil suits from affected workers, all for the same underlying conduct.

Which agencies are part of Oregon’s Interagency Compliance Network? Under ORS 670.700, the network includes the Oregon Department of Justice, the Department of Revenue, the Employment Department, the Department of Consumer and Business Services, BOLI, the Construction Contractors Board, and the State Landscape Contractors Board. HB 4089 expands their shared mandate to include developing investigative methods for gathering and sharing information about potential theft of services under ORS 164.125 and noncompliance with tax or employment laws.

What is a construction labor contractor, and why does their licensing status matter to me? Under ORS 658.405, a construction labor contractor is broadly any person or entity that, for an agreed remuneration or rate of pay, recruits, solicits, supplies, or employs workers to perform construction labor for another. Staffing firms, temp labor agencies, and day labor operations can fall within the definition, though the statute excludes several categories, including certain qualifying staffing agencies. For purposes of the HB 4089 criminal provision, a contractor licensed by the CCB under ORS chapter 701 is not a construction labor contractor. If you knowingly contract with a construction labor contractor that’s required to be licensed and isn’t, you face criminal exposure. Verifying licensing status before contracting is now a legal necessity, not a formality.

When does HB 4089 take effect? January 1, 2027. HB 4089 passed the Oregon House on February 27, 2026 and the Senate on March 5, 2026, and was signed by Governor Kotek on March 31, 2026 (Chapter 53, Oregon Laws 2026). The bill carries no emergency clause and no specified effective date, so it takes effect on the default date for 2026 session legislation under ORS 171.022: January 1 of the following year.

[Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. Because the application of HB 4089, ORS 164.125, and the licensing requirements under ORS 658.405 to 658.511 depends on the specific facts and circumstances of each project, contractors should consult qualified legal counsel regarding their obligations under Oregon law.]