On July 31, 2025, Oregon Gov. Tina Kotek signed HB 2688 into law. The bill, which applies to contracts for “public works” projects entered into on or after July 1, 2026, requires contractors to pay prevailing wages for certain off-site custom work. A public works project in this instance is any project administered by a public entity that costs more than $50,000 or uses at least $750,000 in public funds. This off-site custom work, sometimes referred to as “bespoke” work, is defined broadly and includes numerous systems and components such as HVAC systems, electrical systems, ornamental and structural ironwork, and masonry and plaster systems or components.

Earlier this year, our colleague Josh Dennis wrote for the Daily Journal of Commerce an article that analyzed HB 2688 and described significant ambiguity in the law’s definitions and scope. As a way of example, HB 2688 does not address whether the prevailing wage at the project site or the prevailing wage at the off-site location applies to a given project. HB 2688 also does not address whether prevailing wages apply to off-site work occurring in other states or foreign countries.

In an effort to implement and clarify HB 2688, the Oregon Bureau of Labor and Industries (BOLI) published notice of proposed rulemaking on April 14, 2026, with comments due on or before May 31, 2026. While BOLI could change the proposed rules in response to received comments, it is unlikely that any such change would be material (and require additional notice) as BOLI has represented that it intends to promulgate final rules before HB 2688 takes effect in a few weeks.

Project site prevailing wage controls

The proposed rules clarify that the prevailing wage at the project site will apply to work at off-site locations. This clarification is expected to increase the cost of public construction because most public funds for public works projects are spent on projects located in metropolitan districts, which have higher prevailing wages than more rural districts.

Yet the proposed rules do not address whether such prevailing wages apply to off-site work occurring in other states or countries. This means, as a practical matter, that roughly 14,000 small businesses operating in Oregon could be required to pay higher wages than their competitors in other states and foreign countries. Such a competitive disadvantage would likely negatively affect these small businesses.

Unfortunately, it is unclear if BOLI can, as a constitutional matter, impose prevailing wages on off-site work occurring in other states or foreign countries. Unlike in other states with similar prevailing wage requirements, this issue remains completely unaddressed in Oregon. For comparison, Washington’s attorney general issued a formal opinion stating that Washington’s prevailing wage law could not be applied outside of the state. In another example, the New York Legislature recently passed legislation expressly extending prevailing wages to off-site work occurring in other states. However, that recent legislation is subject to litigation as various contractor associations filed suit in federal court seeking to enjoin enforcement, with an emergency temporary restraining hearing set for later this month.

But even if BOLI could impose prevailing wages for off-site work occurring in other states or foreign countries, it remains unclear whether contractors can fully comply with detailed prevailing wage recordkeeping requirements for such off-site work occurring outside of Oregon. Such recordkeeping requirements include the name and address of each worker, the worker’s correct classification, rate of pay, daily and weekly number of hours worked and the gross wages each worker earned on a public works project during each week. What is clear is that imposing prevailing wages on off-site work will likely impose additional administrative costs and increase premiums for obtaining public works bonds. And in the construction industry, such increased costs are generally passed through to the contracting agency, municipality, or special district.

New exemptions and safe harbor

BOLI’s proposed rules attempt to lessen the financial and administrative impact of HB 2688 by exempting certain off-site work and providing a safe harbor.

The proposed rules generally seek to limit prevailing wage requirements to off-site work that is custom-made according to specifications unique to a particular project. To do this, the proposed rule defines “bespoke” as “work that is performed according to individualized specifications that are contained in a public works contract.” This definition specifically exempts work that is performed before issuance of a public works solicitation, certain manufactured and modular buildings, and mass timber products, as well as the creation or application of concrete, asphalt, paint, and certain art. The proposed rule further provides that prevailing wage requirements only apply to bespoke work that is “performed specifically for, and in accordance with the specifications of, a particular project” and “performed on” specific systems and components, ranging from HVAC systems to mechanical insulation.

The proposed rule also establishes a safe harbor for contractors. Generally, off-site work is not subject to HB 2688 if a contractor can demonstrate that the off-site work produces inventory that can be sold on the general market or used for a different project, or produces a product that was available for purchase before issuance of the public works solicitation. Notably, contractors reserve the right to invoke the safe harbor up to and including a BOLI enforcement action.

Ultimately, the proposed rules provide additional, albeit complicated, clarity on the application of HB 2688. Contractors should familiarize themselves with HB 2688 and any rules that BOLI promulgates in the future. Contractors are encouraged to consult with an attorney to evaluate which specific projects and off-site work might be subject to HB 2688.

Column first appeared in the Oregon Daily Journal of Commerce on June 12, 2026.

This column is intended to provide readers with general information and not legal advice. Consult professional counsel for help regarding specific situations.