Contractors are always trying to stay one step ahead of the competition in the hopes of remaining prosperous in this competitive industry. In the pursuit of lucrative projects, many contractors elect to work in neighboring states as a foreign limited liability company (LLC). Operating in Oregon can result in incredible growth for a foreign company, so long as they remain compliant with state laws.
Below, we discuss what out-of-state contractors need to know about working in Oregon. If you own a foreign business operating in the Beaver State, be sure to follow these rules to the letter; otherwise, you could face stiff penalties. For help operating lawfully in the State of Oregon, consult a Portland construction attorney from Cotney Construction Law.
Registering Your Business
Any business operating out of Oregon, including contractors and construction companies, must register with the Oregon Secretary of State. You can either register your business online or submit the relevant foreign business registration form. All you’ll need is the same information you would use to register your business in your home state — company name, date organized, the state where your company was organized, etc. Consult a Portland construction lawyer if you have any questions.
Failing to register your company with the Secretary of State could result in your company having to pay fees that would have otherwise been avoided. More importantly, you’ll be opening yourself up to debts and civil liabilities that an LLC would normally protect against.
Contractors must be licensed to advertise, bid on, or perform construction on improvements to real property in Oregon. While there are exceptions, most construction and repair services will require a license. Licensing in Oregon depends on the type of structure you work on, and contractors can apply for a residential endorsement, commercial endorsement, or both.
A Responsible Managing Individual (RMI) will need to take a pre-licensing test. You will be notified immediately if you pass, and you can then submit a Construction Contractors Board (CCB) application, a $250 fee for a two-year license, a CCB surety bond, and proof of liability coverage. Applications and instructions for the licensing process can be found here.
The penalty for contracting without a license varies depending on the severity of the offense. For a first offense, unlicensed contractors can be fined $1,000. For submitting a bid while unlicensed, contractors can be fined $700 per offense. And in the event that an owner has filed a complaint for damages, unlicensed contractors can be fined up to $5,000. Considering the costly fines involved, It simply isn’t worth it to contract without a license in Oregon or any state for that matter. Consult one of our Portland contractor lawyers if you are ever accused of contracting without a license.
Workers’ Compensation Insurance
Are you an employer? Do you have workers? If you answered yes to these questions, you probably need workers’ compensation insurance in Oregon. Talk to an insurance agent in your area to find the coverage that’s right for you. Consult a Portland contractor lawyer if you believe that your workers qualify as independent contractors. And don’t forget to display the required Notice of Compliance Poster if you are required to carry workers’ compensation insurance.
The penalties for not having workers’ compensation insurance can be even more severe than contracting without a license. “The penalty for the first offense is twice the amount of premium you should have paid for insurance, with a minimum of $1,000.” Continuing to employ workers without coverage can result in an employer being fined $250 per day of noncompliance. Following a third order, contractors could even face jail time.
General Liability Insurance
As mentioned, you will need to provide proof of general liability insurance in order to obtain a license. You must carry this insurance for as long as you are licensed. Again, consult an insurance agent to find the insurance coverage that’s right for your company. This insurance should cover work subject to ORS 701. Essentially, it should cover the work you are licensed to perform. The policy amount will be determined by the license endorsement mentioned above.
Failing to obtain general liability insurance could result in steep fines and the suspension of your license. Furthermore, general liability insurance protects your company from claims that result from property damage or personal injury. Imagine what would happen if a pedestrian were to be injured while walking on the outskirts of your jobsite. In this scenario, general liability insurance would be an incredible asset. Take it from our Portland contractor lawyers, obtaining general liability insurance can only benefit your company.
Consult an Attorney
If you are just getting started in Oregon, welcome! We wish you and your company all the success in the world. What we’ve discussed above are just a few of the considerations that we hope you’ll take to heart while contracting in Oregon.
Here at Cotney Construction Law, we’ve made it our mission to educate contractors on ever-changing laws and ensure that they avoid issues that have plagued other construction companies. For all of your construction-related legal needs, consider working with our team at Cotney Construction Law.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.