Builders sue to stop state’s out-of-state wage mandate

Portland, Oregon; August 19, 2026: A trade association representing the off-site and modular construction industry filed a lawsuit today challenging an Oregon law that forces out-of-state manufacturers to follow Oregon wage rules for work performed entirely outside Oregon. The Modular Building Institute (MBI) alleges that House Bill 2688 violates its members’ constitutional rights by letting Oregon regulate labor practices beyond the state’s borders.

“Oregon cannot reach across state lines and dictate how businesses operate in other states simply because a finished product is later used on an Oregon public project,” said Wilson Freeman, an attorney with Pacific Legal Foundation. “The Constitution protects a national economy where businesses can compete under predictable rules—not a system where every state can export its regulations nationwide. Modular builders deserve the freedom to work without unconstitutional burdens.”

MBI represents companies that build components and whole building modules in factories before shipping them to project sites for assembly. This process helps reduce construction timelines, cut waste, and lower costs for housing, schools, and other public facilities. But in 2025, Oregon expanded its prevailing wage law to cover off-site fabrication work performed in other states or countries when the finished product is destined for an Oregon public project.

The lawsuit challenges Oregon’s attempt to regulate labor outside its borders in violation of the Commerce Clause. It also challenges rules so vague that businesses cannot know what work is covered until Oregon seeks to penalize them. A victory would protect businesses from unconstitutional state overreach and confirm that states may regulate within their own borders—not everywhere their products may travel.

Pacific Legal Foundation represents MBI free of charge. The case is Modular Building Institute v. Christina Stephenson.