Oregon Expands Wage Theft and Contractor Penalties

On March 31, 2026, Oregon Governor Tina Kotek signed House Bill 4089 (HB 4089) into law, expanding Oregon’s theft of services law to cover attempts to avoid full or partial payment for services and imposing new penalties on construction contractors that knowingly use unlicensed construction labor contractors.

The law also increases penalties for contractor licensing fraud, establishes theft of services penalties based on the value of the unpaid services, and directs Oregon’s Interagency Compliance Network to develop coordinated enforcement strategies for wage-related and licensing violations.

This update applies to Oregon businesses that pay for services, with additional requirements for direct contractors and subcontractors in the construction industry. The law takes effect on January 1, 2027.

Legal Requirements

• Pay for services in full and without intent to avoid full or partial payment, because Oregon’s theft of services statute now expressly applies to conduct intended to avoid payment for services.
• Construction contractors must not knowingly contract with a construction labor contractor that is required to be licensed but is not properly licensed.
• Construction contractors must not use another contractor’s license number without authorization or with intent to deceive.

Practical Considerations

• Verify contractor licenses before subcontracting and reverify periodically.
• Train Human Resources (HR), payroll, procurement, and contract-management personnel on the expanded criminal exposure and contractor licensing requirements.
• Preserve records supporting compliance efforts, including contractor-license verification documentation, subcontractor agreements, and payment records.
• Strengthen wage-payment controls and supporting documentation throughout the contracting chain.
• Review subcontractor onboarding, due diligence, and documentation practices to help support compliance defenses if wage-payment or licensing issues arise.

Overview

Expanded Theft of Services Liability

• HB 4089 expands Oregon’s theft of services statute to cover conduct intended to avoid full or partial payment for services. Previously, the statute was more clearly focused on complete nonpayment.
• “Services” are defined broadly and include labor, professional services, transportation, lodging, utilities, communications, equipment use, and similar services provided for compensation.
• Multiple theft transactions may be aggregated if they occur against multiple victims by similar means within 30 days, or against the same victim (or joint owners) within 180 days.

Criminal Penalty Structure

• Less than $100: Class C misdemeanor.
• $100 to less than $1,000: Class A misdemeanor.
• $1,000 or more: Class C felony.
• $10,000 or more: Class B felony.

Civil and Administrative Remedies Preserved: Criminal prosecution does not prevent an employee, independent contractor, authorized third-party representative, or the Oregon Bureau of Labor and Industries (BOLI) Commissioner from pursuing civil actions or administrative proceedings for unpaid wages, compensation, penalties, damages, or other available relief.

Construction Contractor Licensing Violations

• A direct contractor or subcontractor commits a Class A misdemeanor if it knowingly contracts with a construction labor contractor that is required to be licensed but is not properly licensed.
• A subsequent offense is elevated to a Class C felony.
• Intentional unauthorized use of a construction contractor’s license number, or use of a license number with intent to deceive the public, increases from a Class A misdemeanor to a Class C felony.

Interagency Enforcement Coordination: Oregon’s Interagency Compliance Network must develop investigative methods to gather and share information regarding individuals and entities whose conduct may constitute theft of services and who may also be out of compliance with tax or employment laws.

Why This Matters

This law increases the potential consequences of wage-payment and contractor-licensing violations by creating additional criminal exposure alongside existing civil and administrative remedies. Employers, particularly those operating in the construction industry, may need stronger payment controls, contractor-vetting procedures, and documentation practices to reduce risk under the expanded enforcement framework.

Key Risks for Employers

• The expanded theft of services statute may support criminal investigations and prosecution when conduct is intended to avoid full or partial payment for services.
• Employers may face criminal, civil, and administrative actions arising from the same underlying conduct.
• Knowingly using unlicensed construction labor contractors, repeat licensing violations, and contractor license fraud may result in misdemeanor or felony liability.
• Expanded information-sharing among state agencies may increase detection of wage-payment, licensing, tax, and employment-law violations.

Source References

• Oregon HB 4089 – Relating to criminal offenses related to work; creating new provisions; and amending ORS 164.125, 658.991, 670.700 and 701.990.

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