State Director Anthony Smith reports from Salem on the legislative week ending February 20

February 20 was Day 19 of the 2026 Oregon Legislative Session, which means there are just 16 days left until the Legislature must adjourn this year’s 35-day session. Bills destined for passage are now well on their way to the second chamber, or if they have an impact on how the state spends money, to the Joint Committee on Ways & Means (the state’s budget committee).

In our last update, we focused on several tax issues. This update will focus on proposals that impact the legal landscape for Oregon’s small businesses. But before we dive too deep into that subject, a quick update on the federal tax disconnect bill (SB 1507) is in order.

The bill passed in the Senate February 16 by a vote of 17-13, with all Republican senators and Sen. Mark Meek (D-Gladstone) voting in opposition. This was NFIB’s first Small Business Key Vote of the 2026 legislative session, meaning it will likely appear on our official NFIB Oregon Voting Record, which is published every two years – here’s the one from 2024, for reference. SB 1507 then moved quickly to the House Committee on Revenue. A public hearing was held February 18, and the bill was passed the following morning. The bill now moves on to the House floor, where a vote is imminent.

There is still time to contact your state representative and urge them to vote NO on this measure using NFIB’s action alert system. If you haven’t done so already, please consider utilizing this powerful tool ASAP (and before Tuesday, Feb. 24, which is when the final vote is likely to occur.)

Here’s what else is going on in the Oregon Capitol:

A Big Win on Insurance Affordability

On February 18, something happened in the Oregon House of Representatives that rarely occurs in the Oregon Legislature. A bill failed to pass on the floor. Many bills fail to pass during a legislative session, but usually they die when a key deadline is missed, a committee chair kills the bill in committee, or the Legislature just runs out of time.

But that wasn’t the case for HB 4098, which would add violations of Oregon’s insurance statutes to the state’s Unlawful Trade Practices Act (UTPA). When it came to the floor for a vote, it failed to pass by a vote of 28-30, with two members excused. House Republicans were joined by eight House Democrats in voting against the bill – NFIB’s second Small Business Key Vote of 2026.

One of those House Democrats was the House Majority Leader, Rep. Ben Bowman (D-Tigard), who only voted “no” in order to be on the prevailing side of the vote so he could make a motion to reconsider the bill the next day. He made the motion, but the bill never came back up for a vote. That meant at least seven House Democrats and 23 House Republicans held firm in their opposition, even under immense pressure to change their vote.

As noted in NFIB’s testimony on the bill, HB 4098 would have risked increasing insurance rates at a time when Oregonians and their businesses cannot afford any additional cost burdens. It would have moved Oregon’s insurance market away from a regulatory model to one that incentivizes litigation. Oregon already has a system in place for consumers to bring a lawsuit or file a complaint with the state’s insurance commissioner if they feel they have been treated unfairly. Under Oregon’s Unfair Claims Settlement Practices Act, the Division of Financial Regulation (DFR) can order insurers to pay claims, as well as require restitution and impose fines against insurers that act in bad faith.

Additional enforcement under Oregon’s UTPA would have led to more lawsuits and increased costs for insurers. This would create market pressure to increase premiums for insurance customers. As a result, Oregon consumers and businesses would have to pay more for the same coverage or leave themselves under-insured if they cannot afford to pay more.

This was a huge legislative victory and one of the most bi-partisan floor votes in opposition to a measure in recent Oregon history! It’s a great reminder that Oregon lawmakers are still capable of forming a pro-small business majority on a very controversial issue. NFIB thanks all 30 members of the Oregon House who voted against the bill for standing up for small businesses – and also to all our members who took action on this bill – keep up the fight on other bills that are still alive!

“Good Process” on Wage Claim Liability

Another way that bad bills fail to pass is when they are amended favorably to the point where NFIB is no longer opposed. This seems to be the case for HB 4089, a bill dealing with criminal offenses related to work.

When originally introduced, the bill would have subjected individuals and small business owners to felony charges for failing to correctly pay employees and independent contractors, even when the error was unintentional. It would have also made utilizing the services of an unlicensed contractor a felony punishable by five years in prison, a $125,000 fine, or both.

This was far too extreme a proposal, especially in light of the fact that the Legislature just passed a bill last session that imposes new liabilities on employers and property owners – a bill that went into effect a few short weeks ago that holds upper-tier contactors and certain property owners liable for the illegal actions of their subcontractors (SB 426 from 2025).

HB 4089 was amended in the House Committee on Labor and Workforce Development to significantly narrow the scope of the measure and then moved to the House Committee on Rules, where legislative deadlines do not apply and work can continue on the bill.

The bill is scheduled for its next public hearing and work session on February 24. So long as there are no surprises and all the stakeholders stay true to what they’ve agreed to, the felonies and corresponding punishments should only apply to construction contractors that intentionally hire an unlicensed labor contractor (which is already a misdemeanor offense) after previously being convicted of the same crime. The new penalties will also apply to contractors who use another contractor’s license without authorization with the intent to deceive the public.

While it was very alarming when the bill proponents first brought this concept forward, this is a great example of how the legislative process ought to work. One side had an idea, but it was way too broad, so they worked with the opposition to find a right-sized solution. If only this could happen more often.

If all goes well during the work session, NFIB will deactivate the action alert we currently have up, and refocus our efforts on the remaining bills on our watch list. (So, if you’re reading this after Feb. 24 and you clicked on the link, only to find there is no longer an action alert on this issue, congratulations – we have another win!)

Prior Legislative Report

• 2026 Session of Oregon Legislature Commences