Case Title: North Marion Sch. Dist. #15 v. Acstar Ins. Co.

Citation: 

Docket Number: S53662

State: oregon

Court: Oregon Supreme Court

Date: 2007-10-11T00:00:00Z

Document:
FILED: October 11, 2007
IN THE SUPREME COURT OF THE STATE OF OREGON
NORTH MARION SCHOOL DISTRICT #15,
for the use and benefit of
GONZALO ARANDA TREJO, WILLIAM ALAN AVERY, EUGENE BEEBE,
CORY BRENO, JOE BROCKAMP, RAY CANNON,
RONALD COOPER, CHUCK CRAIG, KEITH DOSSEY,
ALLEN FILER, ROBIN FISK, DAVID FLIPPIN,
DAVID GAST, LUCAS GLENN, DARRELL GUTHERIE,
BASILIO GUTIERREZ, DAVID HILL, DEREK HOLCOMB,
MONTE HOLCOMB, JEFF JONES, DARREN KING,
FRED KNIPE, DONALD KUHNS, JOHN LEDOUX,
JAMES MANNING, IGNACIO MEJIA VALENCIA,
JOSE LUIS MEJIA VALENCIA, GUY MEYERS, NATHAN MORRIS,
TOD MUNDELL, STEVEN NICHOL, JOHN PARTLOW,
NEMESIO PINA-MONDRAGON, JASON PORTLOCK,
BASILIO RUDOMETKIN, CLAYTON SABINE, KIRT SIEGWALD,
ALAN SIMS, DANIEL STEPHENS, JERRY TALLMON,
DENNIS TIDWELL, ROBERT TUTTLE, MARTIN VANDERVIES,
MICAH WALTER, WARREN WEGLEITNER, RICHARD WITBECK,
and CHARLES WOLCOTT,
Petitioners on Review,
v.
ACSTAR INSURANCE CO.,
a foreign corporation;
AMERICAN HOME ASSURANCE COMPANY,
a foreign corporation;
OC AMERICA CONSTRUCTION, INC.,
a foreign corporation;
and CHRISTOPHER J. VANDER KLEY,
an individual,
d.b.a. Vander Kley & Co.,
Respondents on Review.
(CC 0006-05846; CA A119438; SC S53662)
En Banc
On review from the Court of Appeals.*
Argued and submitted January 10, 2007.
Jacqueline L. Koch argued the cause for petitioners on review.  With her on the
joint briefs were Koch & Deering, and J. Dana Pinney, and Bailey, Pinney & Associates,
Portland.
Darien S. Loiselle argued the cause for respondents on review Acstar Insurance
Co., American Home Assurance Co., and OC American Construction, Inc.  With him on
the brief were Schwabe, Williamson & Wyatt, P.C., Kelly T. Hagan, and Sara Kobak,
Portland.
No appearance on behalf of respondent Christopher J. Vander Kley.
Erika L. Hadlock, Assistant Attorney General, argued the cause on behalf of
amicus curiae, Bureau of Labor and Industries.  With her on the brief were Hardy Myers,
Attorney General, and Mary H. Williams, Solicitor General, Salem.
LINDER, J.
The decision of the Court of Appeals is affirmed.  The judgment of the circuit
court is affirmed.
*Appeal from Multnomah County Circuit Court, Jean Kerr Maurer, Judge. 205 Or App 484, 136 P3d 42 (2006).
Durham, J., specially concurred and filed an opinion.  Walters, J., dissented and
filed an opinion.
LINDER, J.
Plaintiffs, former workers on a public works project, filed this action to
recover statutory penalty wages and liquidated damages from a surety who issued
construction bonds to plaintiffs' employer, a subcontractor on the project.  The dispute
arose when plaintiffs' employer became financially unable to meet its payroll and
terminated plaintiffs' employment without paying plaintiffs' final wages on the date that
those wages were due.  Within one month, the employer's surety, Acstar Insurance Co.
(Acstar), paid plaintiffs the amounts that the employer failed to pay them.  In their
actions, however, plaintiffs alleged that, because their final wages were paid late, they
also were entitled to penalty wages and liquidated damages from the surety.  On the
parties' cross motions for summary judgment, the trial court concluded that the surety was
not statutorily liable in an action on the bond for either penalty wages or liquidated
damages based on the late payment of wages.  The trial court therefore granted defendant
Acstar's motion, denied plaintiffs' motion, and entered judgment accordingly. (1)  The
Court of Appeals affirmed.  North Marion Sch. Dist. #15 v. Acstar Ins. Co., 205 Or App
484, 136 P3d 42 (2006).
Plaintiffs petitioned for this court's review and, in support of their petition,
the Commissioner of the Bureau of Labor and Industries (BOLI) filed an amicus brief
urging that the Court of Appeals resolved the liquidated damages issue incorrectly.  We
granted review to address:  (1) whether a surety is liable for penalty wages under ORS
652.150 in an action on a construction bond pursuant to ORS 279.526; and (2) whether
the late payment of wages violates the prevailing wage statute, ORS 279.350(1), thereby
entitling plaintiffs to liquidated damages from the surety under ORS 279.356(1). (2)  As
we explain below, we affirm the decision of the Court of Appeals and the judgment of the
trial court as to both issues.
I.  FACTS AND PROCEDURAL HISTORY
We take the facts from the Court of Appeals opinion and the record.  North
Marion School District #15 hired defendant OC America Construction, Inc. (OC), to be
the general contractor for the North Marion School District Facility Improvements, a
public improvement project.  OC hired defendant Vander Kley as a subcontractor on the
project; Vander Kley, in turn, employed plaintiffs.  As required by ORS 279.029, (3)
both OC and Vander Kley obtained construction bonds to cover their contractual
obligations on the project.  Vander Kley obtained his bonds from defendant Acstar.  After
work on the project commenced, Vander Kley developed financial difficulties and began
to issue late paychecks to his employees.  In March 2000, OC demanded in writing that
Vander Kley pay his employees timely.  On April 27, 2000, Vander Kley became
financially insolvent and could not pay his employees at all.  Vander Kley advised OC of
his financial distress and terminated his employees.  Vander Kley was unable to pay them
their final wages, which were due the next day.  OC informed Acstar of Vander Kley's
situation so that Acstar would pay Vander Kley's final payroll from the bond.  Acstar
attempted to determine the correct amount owed to each employee by obtaining the
certified payroll statements that Vander Kley had filed with North Marion School
District. (4)  Acstar did not immediately receive those statements, however.
Meanwhile, on May 8, 2000, a little over a week after their employment
terminated, plaintiffs -- 47 of Vander Kley's former employees -- sent notices to Acstar,
pursuant to ORS 279.528, of their claims for nonpayment of wages.  The notices
identified the employees by name, but did not describe the work performed or the amount
of wages sought.  Acstar's counsel immediately asked plaintiffs' counsel for that
information, but plaintiffs' counsel did not provide it, asserting instead that Acstar, as the
surety, was responsible for determining the amount of wages due to each employee.  On
May 19, 2000, Acstar succeeded in obtaining copies of Vander Kley's certified payroll
statements.  About a week later, on May 25, 2000, Acstar delivered paychecks to each
plaintiff.  Plaintiffs do not dispute that Acstar paid them all wages that Vander Kley owed
as of their last payday, nor do they dispute that those wages were calculated at the correct
wage rates.
After plaintiffs received their paychecks, they filed this action on the
contractor's bond pursuant to ORS 279.536.  They alleged that they were entitled to
penalty wages under ORS 652.150 for late payment of their final wages.  They also
sought liquidated damages under ORS 279.356(1), claiming that the late payment of their
wages violated the prevailing wage rate statute. (5)  At trial, plaintiffs and defendant
Acstar each filed motions for summary judgment.  As pertinent to the issues on review,
the trial court concluded that (1) Acstar, as a surety for Vander Kley, was not liable for
penalty wages under ORS 652.150 for Vander Kley's late payment of wages; and (2)
plaintiffs failed to comply with the notice provisions of ORS 279.528 and therefore could
not pursue an action on Acstar's bond for liquidated damages under ORS 279.356(1). 
Accordingly, the trial court granted Acstar's motion for summary judgment and denied
plaintiffs' motion.  Plaintiffs subsequently appealed.
The Court of Appeals affirmed the trial court's judgment.  On the penalty
wages issue, the Court of Appeals agreed with the trial court that Acstar, as a surety on a
public works project, was not liable for penalty wages under ORS 652.150.  On the
liquidated damages issue, the Court of Appeals did not decide the adequacy of plaintiffs'
notice of claim.  It instead concluded, more fundamentally, that late payment of wages
does not violate the prevailing wage rate statute and therefore does not give rise to
liability under ORS 279.356(1).  On review, plaintiffs take issue with both of those legal
conclusions on the Court of Appeals' part. (6)  BOLI, in its amicus capacity, sides with
plaintiffs only on the issue of plaintiffs' entitlement to liquidated damages under ORS
279.356(1) based on the late payment of their final wages.
II.  DISCUSSION
A. Legal overview
To sketch the landscape for our discussion, we begin by briefly outlining
the three statutory schemes involved.  The first of the three -- Oregon's wage and hour
statutes, ORS 652.010 to 652.570 (7) -- governs the relationship between employers and
employees on matters such as the maximum number of working hours, discriminatory
wage rates, and when wages must be paid.  With only a few exceptions, the wage and
hour statutes apply to all employees in Oregon working at a fixed rate of compensation
and give them common rights and remedies with regard to timely payment of wages. (8) 
Pertinent to this case are the provisions that require an employer to pay a worker on a
regular or statutorily specified payday.  In general, ORS 652.120(1) provides that "[e]very
employer shall establish and maintain a regular payday, at which date all employees shall
be paid the wages due and owing to them."  For discharged employees, such as plaintiffs,
ORS 652.140(1) requires an employer to pay all earned and unpaid wages within one
business day after termination from employment.  If a discharged employee is not timely
paid final wages, the employer is subject to a penalty in the form of the continued accrual
of the employee's daily wages until those wages are paid.  ORS 652.150(1).
The second of the three statutory schemes -- Oregon's prevailing wage rate
statutes, ORS 279.348 to 279.380 -- is modeled on the federal Davis-Bacon Act. (9) 
Unlike the wage and hour provisions of ORS chapter 652, the prevailing wage rate
statutes apply only to a narrow class of employees -- workers on government construction
(i.e., public works) projects.  Under ORS 279.350(1), contractors (and their
subcontractors) who successfully bid for public works projects are obligated to pay their
workers what is termed the "prevailing rate of wage," which ensures that those workers
"are paid at least the prevailing wage in the area in which the project is carried out for the
workers' respective crafts."  Stockton v. Silco Construction Co., 319 Or 365, 368, 877 P2d
71 (1994).  If a public works contractor pays a worker less than the applicable prevailing
rate, the contractor is liable to the worker for the unpaid wages, plus liquidated damages
of an equal amount.  ORS 279.356(1).
The final set of pertinent statutes are those governing bonds for public
works projects, which also are a part of ORS chapter 279.  ORS 279.526 to 279.542.  
Unlike the wage and hour laws and the prevailing wage rate laws, those bonding
provisions do not exclusively protect workers.  They instead protect all suppliers of
materials and labor for a public works project by providing them with an alternative
source of payment, as would a construction lien for a private project.  See School Dist.
No. 1 v. Rushlight & Co., 232 Or 341, 348, 375 P2d 411 (1962) (public works bonds
provide security comparable to that afforded by mechanics' liens on private work).  As
pertinent to this case, a worker on a public works project who is paid less than the
prevailing wage rate can bring an action on the construction bond to enforce liability for
the violation.  ORS 279.356(2).
B. Plaintiffs' claim for penalty wages
We begin with the issue that arises under the Oregon wage and hour
scheme, i.e., whether Acstar, as Vander Kley's surety, is liable on the construction bond
for what are termed "penalty wages" under ORS 652.150(1).  As described, ORS
652.140(1) requires an employer to pay "all wages earned and unpaid" to a discharged
employee within one business day after the employee's last day of work.  If the employer
fails to pay those final wages on that date, and if the failure is willful, a penalty arises
under ORS 652.150(1):
"[I]f an employer willfully fails to pay any wages or compensation of
any employee whose employment ceases, as provided in ORS 652.140 * * *, then, as a penalty for the nonpayment, the wages or compensation of the
employee shall continue from the due date thereof at the same hourly rate
for eight hours per day until paid or until action therefor is commenced. * * *" 
The penalty for late payment accrues for a maximum of "30 days from the due date." 
ORS 652.150(1)(a).  An employer may avoid liability for penalty wages by showing
"financial inability to pay the wages or compensation at the time the wages or
compensation accrued."  ORS 652.150(5).  If the employer fails to pay the final earned
wages or any penalty wages that accrued for their late payment, the employee has a
statutory "wage claim" against the employer for those amounts.  See ORS 652.320(7)
("wage claim" is a claim against the employer for "any wages, compensation, damages or
civil penalties provided by law to employees in connection with a claim for unpaid
wages"). (10)
In this case, plaintiffs' employer, Vander Kley, fell into financial distress
and, for months, had not been paying plaintiffs on time.  Eventually, he was unable to pay
them at all.  At that point, Vander Kley discharged plaintiffs and Acstar, as Vander Kley's
surety, stepped in to pay plaintiffs their final wages.  By then, the wages already were
overdue under ORS 652.140(1).  Acstar paid plaintiffs their final wages once it
determined the amount owed to each one, which delayed the payments past the due date
by about a month.  Acstar did not, however, pay plaintiffs penalty wages based on the
untimeliness of their final paychecks.
Plaintiffs have two arguments for why they are entitled to recover penalty
wages from Acstar.  First, they argue that Acstar is liable under ORS 279.526(1), which
provides the mechanism for recovery against a contractor's surety bond on a public works
project:
"A person claiming to have supplied labor or materials for the
prosecution of the work provided for in the contract, including any person
having direct contractual relationship with the contractor furnishing the
bond or direct contractual relationship with any subcontractor * * * has a
right of action on the contractor's bond [or other security] as provided for in
ORS 279.029 only if:
"(a) The person or the assignee of the person has not been paid in
full; and
"(b) The person gives written notice of claim, as prescribed in ORS
279.528, to the contractor and the state agency, if the contract is with a state
agency, or the clerk or auditor of the public body that let the contract if the
public body is other than a state agency."
Relying on paragraph (a) of subsection (1), plaintiffs argue that they have not been "paid
in full" because the compensation legally owed to them includes penalty wages under
ORS 652.150.  In effect, plaintiffs urge that being "paid in full" implicitly encompasses
statutory penalties in connection with unpaid earned wages, as well as unpaid wages
themselves.
In resolving that issue, our decision in Butler v. United Pacific Ins.Co., 265
Or 473, 509 P2d 1184 (1973), is instructive.  Butler involved whether a surety on a
statutorily required automobile dealer's bond was liable for punitive damages assessed
against the dealer in a civil action.  This court began its analysis with the common-law
principle that a surety ordinarily is not liable for penalties imposed by law on a person
covered by the bond.  Id. at 474-75 (citing with approval Restatement (First) of Security §
181 (1941)). (11)  The rationale for that limitation is that the purpose of a penalty -- i.e.,
to deter disfavored conduct -- is ill-served when the person who engaged in the conduct
does not have to pay the penalty.  Id. at 477.  Punitive damages, the court observed, fall
within that rationale because they are imposed as a penalty to deter tortious conduct,
rather than as compensation.  Id.  As the court acknowledged, the legislature can change a
surety's liability to encompass penalties such as punitive damages.  Id. at 475.  But the
court was unwilling to impose liability on a surety for penalty amounts unless the
legislature had, in clear and unambiguous terms, so provided by statute.  Id. at 475-78.
The statute at issue in Butler permitted a plaintiff to recover from the bond "any loss or
damage" suffered due to an automobile dealer's fraud; it did not expressly or in other clear
terms authorize recovery of punitive damages.  Id.  The court therefore held that the
surety was not liable for those amounts.  Id. at 478. (12)
As was true of the punitive damages in Butler, "penalty wages" under ORS
652.150(1) are the kind of penalty for which a surety ordinarily is not liable.  They accrue
for an employer's willful failure to pay a terminated employee earned wages on time. 
ORS 652.150(1).  Penalty wages are designed "to spur an employer to the payment of
wages when they are due" and are punitive, not compensatory, in nature.  Nordling v.
Johnston, 205 Or 315, 326, 283 P2d 994 (1955). (13)  Id.  Under Butler, then, Acstar is
liable on its bond for penalty wages only if the legislature unambiguously has provided
for sureties on public works projects to be liable for penalties arising from the contractors'
breach of their payment obligations.
ORS 279.526(1) does not so provide.  The statute declares that a person
"claiming to have supplied labor * * * for the prosecution of the work provided for in the
contract" has a "right of action on the contractor's bond [or other security] as provided for
in ORS 279.029[.]"  In the paragraphs that immediately follow, the statute imposes two
conditions on bringing an action on the bond:  (1) the plaintiff must not have been "paid
in full" and (2) the plaintiff must have given written "notice of claim."  ORS
279.526(1)(a), (b).  In context, "paid in full" and "notice of claim" refer to the claim for
labor supplied on a public works project -- i.e., a claim for earned wages. (14)  The
statute does not expand the surety's liability to include penalties arising from the
principal's breach of its payment obligations, and it certainly does not do so in the express
and unambiguous terms that Butler requires.  We therefore hold that penalty wages under
ORS 652.150(1) are not recoverable in an action on a public works construction bond
under ORS 279.526(1).
Plaintiffs' second theory for holding Acstar liable for penalty wages is that
Acstar is directly liable for penalty wages under ORS 652.150(1) as Vander Kley's agent,
apart from its liability as a surety.  As both the trial court and the Court of Appeals
reasoned, however, our analysis in Taylor v. Werner Enterprises, Inc., 329 Or 461, 988
P2d 384 (1999), forecloses that argument.
In Taylor, this court held that ORS 652.150(1) imposes liability for penalty wages on a worker's "employer" and that, for purposes of that statute, the definition of
employer in ORS 652.310(1) applies.  329 Or at 467.  Under that definition, employer
means "any person who in this state, directly or through an agent, engages personal
services of one or more employees [.]"  ORS 652.310(1).  Thus, liability for penalty wages
extends only to a person who "engages" an employee's personal services.  Even assuming
that Acstar was in some sense Vander Kley's agent for purposes of paying his former
employees (a question that we do not decide), Acstar did not engage plaintiffs' personal
services.  Acstar therefore was not their "employer" for purposes of ORS 652.150(1) and
has no direct liability for penalty wages under the statute.
C. Plaintiffs' claim for liquidated damages
The second issue for our resolution is whether plaintiffs are entitled to
recover liquidated damages under the prevailing wage rate statutes for Vander Kley's late
payment of wages.  Unlike the penalty wages issue previously discussed, the liquidated
damages issue does not turn on whether those damages can be recovered in an action
against the surety on a contractor's bond.  ORS 279.356, which provides the remedy for
violation of the prevailing wage rate requirement of ORS 279.350, expressly provides that
they can be:
"(1)  Any contractor or subcontractor or contractor's or
subcontractor's surety who violates the provisions of ORS 279.350 shall be
liable to the workers affected in the amount of their unpaid minimum wages,
* * * and in an additional amount equal to said unpaid wages as liquidated
damages.
"(2)  Actions to enforce liability to workers under subsection (1) of
this section may be brought as actions on contractors' bonds as provided for
in ORS 279.536."
Significantly, the statute expressly imposes liability for liquidated damages only for a
"violat[ion of] the provisions of ORS 279.350," the prevailing wage rate statute.  As
already described, Acstar paid plaintiffs at the statutorily mandated prevailing rates of
wage, but delivered their paychecks weeks after the date on which Vander Kley owed
them under ORS 652.140.  Plaintiffs' entitlement to liquidated damages in their action on
the bond therefore depends on whether late payment of wages at the statutorily mandated
rate of wage is, in law, a failure to pay at the statutorily mandated rate and, therefore is a
violation of ORS 279.350.
Our starting point is the text of subsection (1) of ORS 279.350, which is the
source of a contractor's obligation to pay prevailing wage rates on public works projects. 
That subsection states, in part:
"The hourly rate of wage to be paid by any contractor or
subcontractor to workers upon all public works shall be not less than the
prevailing rate of wage for an hour's work in the same trade or occupation in
the locality where such labor is performed."
Under that provision, a public works contractor must pay workers on the project an
"hourly rate" of wage that is "not less than the prevailing rate of wage" for an hour's work
in the local area where the work is to be performed.  The term "prevailing rate of wage"
means "the rate of hourly wage, including all fringe benefits * * *, paid in the locality to
the majority of workers employed on projects of similar character in the same trade or
occupation[.]"  ORS 279.348(1).  Thus, by its terms, the obligation that ORS 279.350(1)
creates is the obligation to pay wages at a particular hourly rate.  The statute does not
direct when wages must be paid.
The statute's singular focus -- on the hourly rate of wages, not on when
payment is made -- is confirmed by the remainder of subsection (1).  Immediately after the
sentence specifying that the hourly rate of wage "to be paid" shall "be not less than the
prevailing rate of wage," the statute specifies what a contractor must do to discharge that
obligation:
"The obligation of a contractor or subcontractor to pay the prevailing rate of
wage may be discharged by making the payments in cash, by [providing
statutorily-approved fringe benefit contributions], or any combination
thereof, where the aggregate of any such payments, contributions and costs
is not less than the prevailing rate of wage."
ORS 279.350(1).  That provision, too, is expressly directed only to the amount of wage
that must be paid, not the timing of the payment.  The text of ORS 279.350(1) is
straightforward and unambiguous:  a contractor on a public works project is obligated to
pay its employees no less than a statutorily dictated minimum hourly rate; if the contractor
does so, that obligation is satisfied.  The other subsections of ORS 279.350 reinforce that
conclusion.  Their terms, too, are directed -- pervasively and consistently -- to the amount
of the wage rate obligation, not when wages must be paid. (15)
Finally, the same is true of the remedies provided in ORS 279.356(1) for a
violation of ORS 279.350.  They also turn only on whether the contractor paid wages at
the statutorily mandated rate, not on whether the contractor paid that rate at a particular
time.  Specifically, a violation of ORS 279.350 results in liability in the "amount" of a
worker's "unpaid minimum wages" together with liquidated damages in an equal measure. 
ORS 279.356(1).  In contrast to the penalty under ORS 652.150(1) for late payment of
termination wages, the remedy for violating the prevailing wage requirement is not based
on, or affected by, the length of time that the minimum amount of wages were unpaid. 
The relevant statutes -- ORS 279.350(1), describing the prevailing wage obligation, and
ORS 279.356(1), describing liability for violating that obligation -- reflect a consistent
purpose to enforce the mandated hourly wage rate, not to independently enforce whatever
obligation the contractor has to pay wages timely.
The wage rate obligation imposed by ORS 279.350(1) therefore is satisfied
when the contractor, or in this case its surety, tenders payment to the employees based on a
wage rate that is not less than the statutorily mandated minimum.  Conversely, if the
contractor tenders wages at less than the prevailing wage rate, regardless of whether the
payment is timely or untimely, the contractor violates the prevailing wage rate obligation.
The contractor then incurs liability for liquidated damages and the worker may recover
those liquidated damages in an action on the bond, as ORS 279.356(2) expressly provides. 
That does not mean that contractors on public works projects have no obligation to pay
their workers within or at a specified time.  They do.  The obligation arises from the wage
and hour provisions of ORS chapter 652, which, as already discussed, give employees of
public works contractors the same remedies, on the same terms, as they give to Oregon
workers generally.  The liquidated damages that plaintiffs seek under ORS 279.356(1)
expressly arise only from a violation of the prevailing rate wage requirement of ORS
279.350(1).  The legislature did not tie that remedy to any statute that imposes a time-of-payment obligation on employers generally or on public works contractors in
particular. (16)
BOLI concedes that ORS 279.350 does not expressly impose a time-of-payment obligation on public works contractors.  BOLI urges, however, that "[o]ther
statutes provide context establishing that workers on public-works contracts are entitled to
receive the prevailing wage on their regular paydays."  BOLI points to the provisions in
ORS chapter 279 that require employers to maintain regular records of the payroll and that
permit the commissioner to inspect those records.  See ORS 279.354 (requiring weekly
certification of wage rate); ORS 279.355 (inspection of payroll records).  BOLI urges that
there would be "little reason" to mandate the maintenance of weekly payroll records if the
legislature did not intend to require regular payment.
BOLI's argument reads too much into those statutes.  Those provisions
implement the commissioner's general authority to "gather facts and information necessary
to determine if the prevailing rate of wage is actually being paid."  ORS 279.355(1)
(emphasis added).  To aid the commissioner in that task, ORS 279.354(1) requires every
contractor on a public works project to file weekly statements under oath "certifying the
hourly rate of wage paid each worker" on the project and "further certifying that no worker
employed upon such public work has been paid less than the prevailing rate of wage"
specified in the contract.  The contractor is not required to certify that the wages were paid
timely.  As BOLI acknowledges in its brief, the regular pay records that the commissioner
is authorized to inspect are incidents of an employer's obligation under ORS 652.120 to
establish regular paydays for its employees.  The fact that the legislature assumed the
existence of regular payroll records for purposes of the commissioner's authority to
determine "if" the prevailing wage rate is being paid implies no obligation, separate from
or independent of the obligations imposed by ORS chapter 652, to pay the employees at a
particular time.  Said another way, determining that wages were paid is necessary to
determine how much was paid, but determining the timeliness of the payment is not. (17)
Using a different line of reasoning than that offered by plaintiffs or BOLI,
the dissent comes to a like conclusion:  "a contractor violates the prevailing wage statute,
and wages are unpaid, when a contractor fails to pay its workers the prevailing wage on
the date that wage is due, viz.:  the statutorily required payday."  ___ Or at ___ (Walters, J.,
dissenting) (slip op at 1) (emphasis in original).  To arrive at that formulation, the dissent
conflates the several discrete statutes involved and, in the process, rewrites them.
The requirement that "[e]very employer shall establish and maintain a
regular payday, at which date all employees shall be paid the wages due and owing to
them," arises under ORS 652.120(1).  The requirement that "[t]he hourly rate of wage to
be paid by any contractor or subcontractor to workers upon all public works shall be not
less than the prevailing rate of wage" is in ORS 279.350(1).  Finally, and significantly, the
term "unpaid" -- which is central to the dissent's analysis -- is in ORS 279.356(1), which
describes the contractor's liability for failing to pay the prevailing rate of wage:  "Any
contractor * * * who violates the provisions of ORS 279.350 shall be liable to the workers
affected in the amount of their unpaid minimum wages[.]"  (Emphasis added.)  The dissent
acknowledges, as it must, that those statutes reside in separate chapters of the ORS, but
urges that their "obligations are interdependent" and that they "work hand in glove" to
require the contractor to pay the prevailing wage on payday, otherwise the contractor
"violates the prevailing wage statute and must pay the penalty set forth in ORS 279.356." 
___ Or at ___ (Walters, J., dissenting) (slip op at 3).
There lies the heart of our disagreement with the dissent.  The fact that the
statutes are complementary and work together does not mean that this court can mix and
match the obligations and remedies that they contain.  A contractor's statutory obligation to
pay wages on a particular day is independent of the statutory obligation to compensate
workers at not less than the prevailing hourly wage rate.  The legislature could repeal
either obligation without affecting the other.  The legislature was entitled to -- and did --
create different remedies and liabilities for those legally distinct and independent
obligations.  Our analysis gives effect to the legislature's policy choice to treat the failure
to pay wages timely as a different problem than paying too low an hourly rate of wage. 
The dissent's analysis does not.
The dissent is wrong in asserting that "ORS 279.356 provides the sole
remedy" for a contractor's failure to pay wages on the dates due under ORS chapter 652. 
See ___ Or at ___ (Walters, J., dissenting) (slip op at 3).  As the dissent later concedes, but
only by way of footnote, ORS 652.150 contains a substantial penalty provision for an
employer that does not timely pay termination wages -- which are the only wages involved
in this case.  Id. at ___ n 3 (slip op at 3 n 3).  As to the obligation to pay wages on a
regular payday, ORS chapter 652 does, in fact, contain provisions to enforce that
obligation, as described earlier in this opinion.   ___ Or at ___ n 10 (slip op at 9 n 10).  To
be sure, the legislature did not provide for automatic economic penalties any time an
employer, for any reason, does not pay its employees on the regular paydate.  One of the
primary ways that obligation is enforced is through the commissioner's discretion to
require the employer to post a special bond in an amount as is "reasonable and adequate in
the circumstances."  ORS 652.340(1).  If the employer does not post the bond, it is up to a
court to enforce the obligation if "reasonably necessary or appropriate to secure the prompt
payment of the wages."  ORS 652.340(3).  As the statutory scheme stands, the regular
payday obligation is not unbending.  If, for example, a computer glitch, a fire, an
earthquake, a repeat of the 1996 flooding disasters through the Willamette Valley, or other
equally sympathetic circumstance causes the employer to issue paychecks after the regular
paydate, no penalty or other harsh economic consequence would follow.  The dissent's
analysis, however, would nullify the latitude that the legislature built into the statutory
scheme.
In an effort to defend its approach, the dissent resorts to federal law and
draws on federal court interpretations of the Fair Labor Standards Act's (FLSA) "prompt
payment" requirement for the federal minimum wage.  See ___ Or at ___ (Walters, J.,
dissenting) (slip op at 6-9).  Fundamentally, however, FLSA is not the correct federal law
analog.  The Davis-Bacon Act, on which Oregon's and numerous other state and local
prevailing wage provisions are modeled, is the proper federal act to consider. (18)  The
dissent does not cite -- nor does research disclose -- so much as one reported decision
holding that a late wage payment at the statutorily mandated hourly wage rate violates any
jurisdiction's prevailing wage rate law. (19)
Even if FLSA were a correct analog, the dissent's reliance on it is misplaced. 
Federal courts have implied a time-of-payment obligation under FLSA because Congress
left that gap for them to fill.  See, e.g., Biggs v. Wilson, 1 F3d 1537, 1539-41 (9th Cir
1993) (identifying express provisions of FLSA that would be ineffective if no time-of-payment requirement were implied) and 1544-46 (Trott, J., dissenting) (agreeing that
Congress, through its silence, left the courts to imply a time-of-payment requirement, but
disagreeing that any delay beyond when wages are legally owed, however slight or for
whatever reason, triggers a violation of FLSA). (20)  The same is not true of our
statutory scheme.  The legislature filled the gap expressly, by creating both time-of-payment obligations and express rights and liabilities that arise from an employer's failure
to comply with those obligations in ORS chapter 652.  This court has no license to imply
different or further rights and liabilities where the legislature has fashioned them
expressly.  See generally, Stockton, 319 Or at 376 (the remedial nature of the prevailing
wage statutes does not give this court authority to read into the statutes a remedy that the
legislature did not intend to create). (21)
We therefore hold that the late payment of the full amount of wages owed at
the prevailing rate does not violate the prevailing wage statute, ORS 279.350(1).  In this
case, it is undisputed that Acstar paid plaintiffs at the statutorily mandated prevailing wage
rates.  Consequently, the amount that plaintiffs were paid did not violate the prevailing
wage rate statute and plaintiffs were not entitled to liquidated damages under ORS
279.356(1), as both the Court of Appeals and the trial court concluded.
The decision of the Court of Appeals is affirmed.  The judgment of the
circuit court is affirmed.
DURHAM, J., specially concurring.
I concur in the majority's conclusion that defendant Acstar Insurance Co.
(Acstar), a surety, is not liable for penalty wages under ORS 652.150 in an action to secure
relief under a construction bond under ORS 279.526 (1999). (22)  I also concur,
although for a different reason, with the majority's refusal to allow plaintiffs to recover
liquidated damages from defendant Acstar under ORS 279.526.
ORS 279.526 provides, in part:
"(1) A person claiming to have supplied labor or materials for the
prosecution of the work provided for in the contract, including any person
having direct contractual relationship with the contractor furnishing the bond
or direct contractual relationship with any subcontractor, or an assignee of
such person, or a person claiming moneys due the State Accident Insurance
Fund Corporation, the State Department of Employment Trust Fund or the
Department of Revenue in connection with the performance of the contract,
has a right of action on the contractor's bond, cashier's check or certified
check as provided for in ORS 279.029 only if:
"(a) The person or the assignee of the person has not been paid in full;
and
"(b) The person gives written notice of claim, as prescribed in ORS
279.528, to the contractor and the state agency, if the contract is with a state
agency, or the clerk or auditor of the public body that let the contract if the
public body is other than a state agency."
Subsections (1)(a) and (b) of that statute establish separate preconditions for
the right of action on a contractor's bond described in section (1).  The majority decides
that plaintiff's action fails under subsection (1)(a), because plaintiffs are not persons who
have "not been paid in full."  According to the majority, the statutory phrase "paid in full"
imposes no obligation to pay wages on time; it requires only the payment of the correct
amount of wage (here, the prevailing wage) regardless of the lateness of that wage
payment.  The dissent challenges that opinion, asserting that the phrase "paid in full"
incorporates a duty to pay the required wage on the payday established under ORS
652.120(1).
In my view, plaintiff's action under ORS 279.525(1) fails because plaintiffs
failed to satisfy the notice of claim requirement in subsection (1)(b).  That provision
requires plaintiffs to give a written notice "as prescribed in ORS 279.528, to the contractor
* * *."  ORS 279.528(3) provides:
"The notice shall be in writing substantially as follows:
"To (here insert the name of the
contractor and the name of the state agency or
public body):
"Notice hereby is given that the
undersigned (here insert the name of the
claimant) has a claim for (here insert a brief
description of the labor or materials performed
or furnished and the person by whom performed
or furnished; if the claim is for other than labor
or materials, insert a brief description of the
claim) in the sum of (here insert the amount)
dollars against the bond taken from (here insert
the name of the principal and, if known, the
surety or sureties upon the bond) for the work of
(here insert a brief description of the work
concerning which the bond was taken).  Such
material or labor was supplied to (here insert the
name of the contractor or subcontractor).
"_____________________ (here to be signed)"
The trial court found the following pertinent facts, which are not disputed,
regarding plaintiffs' notices:
"The employees filed notices of claim on May 8, 2000.  The notices
did not contain information required by ORS 279.528, nor were they in
substantial compliance with the statute.  They did not provide the payroll
period, the hours worked, the pay rates, the total amount due, or the contract
on which the work was performed.  Acstar Insurance Company received its
first notice of bond claim by certified mail from plaintiffs' counsel on or
about May 15, 2000.  The following day, on May 16, 2000, defendants made
an appearance through counsel and by letter requested the information
lacking in the notices.  Plaintiffs' counsel declined to provide the requested
information, asserting that the sureties were responsible for ascertaining the
amount due each of the employees."
The statute requires substantial compliance with the notice requirements. 
School Dist. No. 1 v. Rushlight & Co., 232 Or 341, 375 P2d 411 (1962).  The trial court's
findings confirm that plaintiffs' notices did not meet that standard.  For example, plaintiffs
did not comply substantially with the duty to give notice of the amount of the claim merely
by disclosing other information that would allow the surety, after conducting its own
investigation, to discover the amount of the claim.  A notice with a deficiency of that
magnitude cannot fulfill the public notification function that the legislature intended.  For
that reason, the majority's decision to affirm the trial court's judgment is correct.
Because plaintiffs' noncompliance with ORS 279.526(1)(b) is determinative,
I do not decide this case, as the majority does, under ORS 279.525(1)(a).  However, I shall
explain briefly the reason why the dissent has the better of the argument about the scope of
the action that ORS 279.526(1) embodies.
Under ORS 279.526(1)(a), plaintiffs may bring an action against a surety if
they have "not been paid in full[.]"  The phrase, "paid in full," lies at the heart of this case.
The majority focuses on numerous references in other statutes to the amount
of the required payment, i.e., the prevailing wage.  Certainly, a tender of a paycheck in an
amount less than the prevailing wage would violate the legal duty to pay the prevailing
wage in full.
What the majority ignores is that the key phrase "paid in full" has two
substantive components:  "paid" and "in full."  By focusing on the second of those
components, the majority fails to investigate the meaning of the first.
What did the legislature mean when it required in ORS 279.526(1)(a) that a
plaintiff be a person who has not been "paid"?  The statute incorporates no specialized
definition of the term "paid," but, in construing that term, we must consult the statutory
context, i.e., other related statutes that help to explain the legislative intent in using the
term "paid."
ORS 652.120(1) provides:
"Every employer shall establish and maintain a regular payday, at
which date all employees shall be paid the wages due and owing to them."
(Emphasis added.)  That statute applies to every employer and all employees, including
those working under a public works contract.  By requiring every employer to establish a
regular payday and requiring payment of all owed wages on that date, the statute creates a
deadline, known to all parties, that clearly identifies whether an employer has fulfilled the
duty to pay its employees.  In common parlance, we can say that employees have "not been
paid" if, at the end of the established payday, the employer has failed to tender the
compensation due and owing.
ORS 652.120(1) is helpful context regarding the meaning of the term "paid"
in ORS 279.526(1)(a).  A claim that a person has "not been paid" refers to the employer's
failure to tender compensation due and owing by the payday deadline established under
ORS 652.120(1).  A tender of compensation many days or weeks after the payday deadline
is a late payment, but not one that complies with the policy regarding timely payment that
the legislature has created in ORS 652.120(1).  It was that policy that the legislature had in
mind when it authorized employees to bring a claim against a surety if they had not been
paid in full.  ORS 652.120(1) makes clear the legislature's intent in using the term "paid"
in ORS 279.526(1)(a).
The majority refuses to consider ORS 652.120(1) as helpful context in the
construction of ORS 279.526(1)(a).  That is an error.  By focusing heavily on the meaning
of the phrase "in full," the majority concludes that no action lies here because employees
received their correct compensation eventually, although several weeks after the
designated payday.  The majority fails to recognize that, at the end of the designated
payday, the employees had "not been paid," under ORS 279.526(1)(a), in any amount, let
alone "in full."
The Bureau of Labor and Industries has submitted an amicus curiae brief
explaining the serious administrative problems and inconsistencies that will arise for the
Bureau if this court were to accept the interpretation of ORS 279.526(1)(a) that defendant
Acstar urges.  The majority has agreed with Acstar and has rejected the arguments of the
Bureau.  It now appears that the Bureau's administrative difficulties will persist until the
legislature revisits this topic.
For the reasons explained above, I specially concur in the majority's result.
WALTERS, J., dissenting.
A contractor that violates the prevailing wage statute must pay a penalty
equal to the unpaid wages.  ORS 279.356(1). (23)  I conclude that a contractor violates
the prevailing wage statute, and wages are unpaid, when a contractor fails to pay its
workers the prevailing wage on the date that wage is due, viz.:  the statutorily required
payday.  ORS 652.120. (24)
The majority acknowledges that a contractor is required to pay its workers
on payday, and that the contractor must pay its workers the prevailing wage on that date. 
But the majority decides that the contractor does not violate the prevailing wage statute,
and wages are not unpaid, if the contractor fails to perform as required.  The majority
holds that no penalty can be imposed unless and until the contractor, at some unknown,
unpredictable, moving target date, "tenders wages at less than the prevailing wage rate." 
___ Or at ___ (slip op at 18).  By that reasoning, a contractor that tenders payment of a
penny less than the amount due, five years after the job is completed, violates the
prevailing wage statute and the wage becomes unpaid.  A contractor that never tenders
even a penny does not violate the statute and the wage never becomes unpaid.  
Because the express terms of Oregon law and the purposes served by that
law dictate a contrary result, I must dissent.
Three Oregon statutes compel the result that I reach.  First, the Oregon
prevailing wage rate statute, ORS 279.350(1), requires that a public contractor employer
pay its employees "not less than the prevailing rate of wage":  
"The hourly rate of wage to be paid by any contractor or
subcontractor to workers upon all public works shall be not less than the
prevailing rate of wage for an hour's work in the same trade or occupation in
the locality where such labor is performed.* * *"
Second, ORS 652.120(1) requires that all employers pay employees the "wages due and
owing to them" on a payday established by the employer:  
"Every employer shall establish and maintain a regular payday, at
which date all employees shall be paid the wages due and owing to them." 
Third, ORS 279.356(1) makes a contractor who violates the prevailing wage law liable
and provides remedies:
"Any contractor or subcontractor or contractor's or subcontractor's
surety who violates the provisions of ORS 279.350 shall be liable to the
workers affected in the amount of their unpaid minimum wages, including
all fringe benefits under ORS 279.348(4), and in an additional amount equal
to said unpaid wages as liquidated damages."
(Emphasis added.)   
The majority acknowledges the obligations imposed by all three of the
foregoing statutes, but asserts, as the sole stated basis for its disagreement with this
dissent, that each obligation is independent of the others and that the legislature has
provided "different remedies and liabilities" for violation of each.  ___ Or at ___(slip op at
21).  The majority grounds its ruling on what it says is a legislative "policy choice" to treat
the obligations differently.  In fact, the payrate and paydate obligations are interdependent
and the legislature has provided but one penalty for their violation.  As demonstrated by
the text, context, and history of enactment of those statutes, the legislature intended that
they work hand in glove.   
The text of the prevailing wage statute, ORS 279.350, requires that
contractors pay their workers "not less than the prevailing rate of wage."  ORS 279.350(1). 
If contractors do not pay their workers on payday, the day the wage is due, they pay them
zero, a sum that is certainly "less than the prevailing rate of wage."  The contractor
therefore violates the prevailing wage statute and must pay the penalty set forth in ORS
279.356.  
ORS 279.356 provides the sole remedy for violation of the intertwined
obligations to pay the wage due on the date due.  There is no separate remedy for a
contractor's failure to make payment on payday and the majority does not point to any. 
The payday statute is ORS 652.120.  Chapter 652 contains no remedy for violation of that
statute. (25)  That does not mean that there is none.  The remedy for employees who are
entitled to the prevailing wage is found in chapter 279 because the remedy is calculated
based on the rate of pay set forth in that statute. (26)
My conclusion that the prevailing wage statute works in tandem with the
payday statute is also based on the context in which the prevailing wage statute is found. 
Chapter 279 is replete with provisions that are built on the assumption that contractors are
required to pay the prevailing wage on payday.  For instance, ORS 279.528 requires
workers to give notice of claims for unpaid wages within 120 days from the date they "last
provided labor." (27)  If the majority's reasoning were correct, the legislature would have
given the workers 120 days from the date that a contractor tenders inadequate payment to
give notice.  That date could, of course, be years after the date workers "last provided
labor."  The statute, as written, assumes that a violation occurs on a date certain before, or
sometime shortly after, the date on which the worker last provides labor.  The statute
certainly does not anticipate that a violation will occur at some undetermined time long
after payment was due when the contractor happens to tender payment to its workers.
Another statute in chapter 279 that indicates that the legislature intended that
the payrate and paydate statutes work synchronously is ORS 279.314(1).  That statute
provides that every public works contract must contain a clause or condition stating that if
the contractor fails, neglects, or refuses to make "prompt" payment, the public contracting
agency may pay the wage claim and charge the amount paid against funds owed to the
contractor.  The contractual right of a public contracting agency to step in and pay wages
when a public contractor has failed to pay them promptly anticipates that the public
contractor is otherwise obliged to do so.  In fact, subsection (4) of ORS 279.314 provides
that payment by the public agency "shall not relieve the contractor or the contractor's
surety from obligation with respect to any unpaid claims."  Other examples of provisions
that anticipate and supplement the requirement that contractors pay their workers on
payday include the following:  ORS 279.320 (contractors shall "promptly, as due, make
payment" for worker's compensation or employees' medical care); ORS 279.354(1)
(requiring contractors to send weekly certified statements of workers' hours and the wages
paid in the previous week); ORS 279.355(4) (BOLI may initiate actions against employers
to enjoin future failures to pay wages due); ORS 279.350(1) (contractor may discharge its
obligation to pay prevailing wages by making payment in cash or by providing benefits). 
All of the foregoing add up to what is, in any event, inescapable as a matter
of logic:  For Oregon's minimum wage laws to work, there must be a time at which a
violation occurs.  Oregon law provides that that time is the date wages are due: payday.  
To conclude that a violation of the prevailing wage statute does not occur on a date
expressly selected by the Oregon legislature but, instead, occurs (if at all) on some
unknown date when payment is tendered, and may never occur if payment is never
tendered, requires a jump not found in the text of the statutes themselves.  And, the place
the majority lands is contradicted by the history of that statute's enactment. 
Both Oregon and federal law include two payrate statutes: the minimum
wage statute applicable to all employees (ORS 653.025; 29 USC § 206 (a provision of the
Fair Labor Standards Act)), and the prevailing wage statute applicable to employees
working on public works projects (ORS 279.350; 40 USC § 3142 (a provision of the
Davis-Bacon Act)).  The prevailing wage statute  "is a minimum wage law designed for
the benefit of construction workers."  U.S. v. Binghamton Construction Co., 347 US 171,
178, 74 S Ct 438, 98 L Ed 594 (1954).  
Each of those payrate statutes sets out the minimum rate at which employers
must pay their employees.  None of those payrate statutes impose an obligation to make
payment at a certain time.  But where those statutes impose a penalty for violation of the
obligation to pay the required pay rate, the penalty is triggered when an employer fails to
pay the required wage rate on time.  Federal law requires an employer that violates the
federal minimum wage statute to pay liquidated damages as follows:
"Any employer who violates the provisions of section 206 or section
207 of this title [setting forth the minimum wage rate] shall be liable to the
employee or employees affected in the amount of their unpaid minimum
wages, or their unpaid overtime compensation, as the case may be, and in an
additional equal amount as liquidated damages. * * *"
29 USC § 216(b) (emphasis added).
In Brooklyn Bank v. O'Neil, 324 US 697, 65 S Ct 895, 89 L Ed 1296 (1945),
the United States Supreme Court considered whether an employer was liable for liquidated
damages under that statute when it did not pay plaintiff wages owed when due, but
tendered the wages, at the correct rate, two years after they were due.  The Supreme Court
held, that although the employer paid wages in the correct amount, it violated the
minimum wage statute when it did not pay those wages on time.  Id. at 707.  The Supreme
Court decided that the liquidated damages were intended to restore damage done by an
employer's failure to timely pay the required wage.  The Supreme Court stated that the
penalty:
"constitutes a Congressional recognition that failure to pay the statutory
minimum on time 'may be so detrimental to maintenance of the minimum
standard of living 'necessary for health, efficiency, and general well-being of
workers' and to the free flow of commerce, that double payment must be
made in the event of delay in order to insure restoration of the worker to that
minimum standard of well-being." 
Id. (emphasis added) (quoting 29 USC § 202(a)). 
The Oregon legislature enacted its minimum wage statute for public laborers
14 years after the Supreme Court's decision in O'Neil.  As a remedy for violation of that
statute, the legislature adopted a liquidated damages provision virtually identical to the one
that Congress imposed for failure to pay the federal minimum wage.  Or Laws 1959, ch
627, § 6 .  That statute, ORS 279.356, provides:
"Any contractor or subcontractor or contractor's or subcontractor's
surety who violates the provisions of ORS 279.350 shall be liable to the
workers affected in the amount of their unpaid minimum wages, including
all fringe benefits under ORS 279.348(4), and in an additional amount equal
to said unpaid wages as liquidated damages."
ORS 279.356(1) (emphasis added). (28)
By enacting an identical penalty for violation of its prevailing wage statute,
we presume that the Oregon legislature intended that the penalty be interpreted as the
Supreme Court interpreted the federal penalty, to impose liability for the failure to pay the
wages due on time.  See, e.g., State v. Cooper, 319 Or 162, 167-68, 874 P2d 822 (1994)
("When the Oregon legislature adopts a statute modeled after another jurisdiction, an
interpretation of that statute by the highest court of that jurisdiction that was rendered in a
case decided before adoption of the statute by Oregon is considered to be the interpretation
of the adopted statute that the Oregon legislature intended.").
The majority ignores the Supreme Court's decision in O'Neil and contends
that "[f]ederal courts have implied a time-of-payment obligation under FLSA because
Congress left that gap for them to fill." ___ Or at ___ (slip op at 23).  O'Neil holds that an
employer is liable for a penalty when it does not pay the minimum wage on time.  The
lower federal courts have come to various conclusions about when the federal minimum
wage is due.  See ___ Or at ___ (slip op at 24 n 20) (citing cases).  Some lower federal
courts hold that employers must make payment within a reasonable time.  The Ninth
Circuit holds that employers must make payment on a contractually required payday. 
Biggs v. Wilson, 1 F3d 1537, 1539-41 (9th Cir 1993).  The reason there is a "gap" in
federal law, open to judicial interpretation, is that there is no federal statute that requires
payment of wages on payday.  The Oregon legislature filled the "gap" statutorily by
adopting the payday statute.  ORS 652.120.  
Oregon employers are liable for violating the Oregon prevailing wage statute
when they fail to pay the wages in the correct amount  "on time."  ORS 279.356(1), as
interpreted by the Supreme Court in O'Neil.  "On time" in Oregon means on
"payday." (29)  ORS 652.120.  The majority is just plain wrong when it states that the
Oregon legislature filled the gap by creating liabilities for an employer's failure to pay the
minimum wage on payday in ORS chapter 652.  ___ Or at ___ (slip op at 24).  As I have
explained, there is no remedy for violation of ORS 652.120 in chapter 652. 
The majority points out that there are no cases in which courts discuss time-of-payment requirements imposed by the Davis-Bacon Act or state acts that mirror it.  That
is not surprising, because the Davis-Bacon Act, and those modeled precisely on it, do not
even include provisions directly requiring employers to pay the prevailing wage, much less
requiring that they pay liquidated damages in the event of untimely payment.  See 40 USC
§§  3141-3148.  In requiring public contractors to pay the prevailing wage (ORS
279.350(1)), imposing a penalty for failing to timely pay that wage (ORS 279.356(1)), and
enacting its payday statute (ORS 652.120), Oregon created an enforcement  mechanism for
the prevailing wage statute that is not found in the Davis-Bacon Act.  It is the case law
relating to that enforcement mechanism that should enlighten us. 
The legislature's imposition of a penalty for violation of the prevailing wage
statute evidences a true concern for the plight of employees for whom every dollar counts. 
A legislature concerned with underpayment surely would have as great a concern about 
nonpayment.  Yet, the majority insists that it can discern a legislative "policy choice" to
condemn payment that is a penny short, whether five days or five years late, but to turn its
back on nonpayment and impose no penalty at all.  I cannot comprehend why the majority
works so hard to divorce two statutes that work in such harmony.  A time-of-payment
requirement is necessary to effectuate a rate-of-pay requirement.  Although a legislature
could theoretically enact one without the other, there would be no reason for it to do so. 
To be of use, a rate of payment requirement must be tethered to time, just as a date for
payment waits in need of the sum it must pay.  
For over 60 years it has been the law of this land that a requirement that a
wage be paid at a certain rate is, and must be, accompanied by an obligation to pay that
wage on time.  In Oregon, on time means on payday.  I cannot countenance a departure
from those precepts, not because they originated with me, but because they have been
cognizable by all until this day.  I must, therefore, respectfully dissent.
1. Acstar is not the only defendant in the case.  Defendants also include the general
contractor (OC America Construction, Inc.) and its surety (American Home Assurance
Company), as well as the subcontractor (Vander Kley) who employed plaintiffs.  The
judgment resolved all claims as to all parties.  In the Court of Appeals, plaintiffs did not
challenge the trial court's rulings that absolved the general contractor and its surety of
liability.  As noted, Vander Kley is insolvent.  Thus, the surety issues before the Court of
Appeals concerned only defendant Acstar's liability.  On review, the issues before this
court are likewise limited.  We therefore discuss the procedural and historical facts only as
they pertain to defendant Acstar.
2. In 2003, the legislature repealed ORS chapter 279.  Or Laws 2003, ch 794, § 332. 
That repeal became effective March 1, 2005, and applies only to public contracts first
advertised or entered into on or after that date.  Id. at §§ 336, 337.  Consequently, we refer
throughout this opinion to the 1999 versions of the provisions of ORS chapter 279, which
were in effect at the time of the relevant events in this action.
3. ORS 279.029(4) required a contractor on a public improvement project to be bonded
and provided, in part:
"The successful bidder shall:
"* * * * *
"(b) If the contract is for a public improvement, execute and deliver to the
public contracting agency a good and sufficient bond, to be approved by the public
contracting agency, in a sum equal to the contract price for the faithful performance
of the contract."
4. See generally ORS 279.354(1) (requiring subcontractor to file weekly certified
statements with the public contracting agency setting out, among other information, a
worker's correct classification, rate of pay, number of hours worked, deductions from pay,
and actual wages paid).
5. The relevant parts of those statutes are set out below.
6. The Court of Appeals also held that plaintiffs' claims against their employer, Vander
Kley, were barred by his discharge in bankruptcy.  See 11 USC § 524(a) (voiding any
judgment that determines the personal liability of a discharged debtor and enjoining any
further proceedings to make the debtor personally liable for the debt).  On review,
plaintiffs do not challenge that holding.  Defendant Acstar, however, renews its challenges
to the adequacy of plaintiffs' notice of their claim as an additional or alternative ground for
affirming the Court of Appeals on the liquidated damages issue.  As did the Court of
Appeals, we decline to reach that question given our resolution of the liability issues.
7. The provisions of ORS chapter 652 at issue here have been amended since the
relevant events in this action occurred.  The operative text of the current provisions,
however, is substantively the same as the 1999 version in effect at the time of those events. 
For that reason, we refer to the current versions of the provisions of ORS chapter 652.
8. Employees of the federal government are among the few who are not covered by the
time-of-payment provisions of ORS chapter 652.  See ORS 652.210(2) (exempting the
federal government from definition of employer).
9. 40 USC §§ 3141 to 3148 (formerly 40 USC §§ 276a to 276a-5).  A comprehensive
discussion of the origins of Oregon's prevailing wage rate statutes and their parallels to the
federal act is contained in Stockton v. Silco Construction Co., 319 Or 365, 373-76, 877
P2d 71 (1994).
10. In addition to the penalty wages provision of ORS 652.150, the wage and hour
statutes of ORS chapter 652 contain several other enforcement mechanisms for an
employer's time-of-payment obligations.  See, e.g., ORS 652.125 (when an employer is
"failing to pay wages within five days" of a regular payday, commissioner of BOLI may
require the employer to post a bond to secure future payment); ORS 652.330(1)(a)
(authorizing commissioner to investigate and attempt to equitably resolve employee wage
claims); ORS 652.330(1)(b), (c) (employee can assign wage claim to commissioner, who
may pursue civil and criminal actions for wage law violations); ORS 652.340 (if
employees are not being paid for their services, commissioner may require employer to
post a bond in such amount as is "reasonable and adequate in the circumstances" to ensure
employees are paid "in accordance with the laws of Oregon"); ORS 652.409 (when
employer is unable to pay wages, the worker can be paid back wages from the Wage
Security Fund); ORS 652.900(1) (commissioner can assess a civil penalty of up to $1,000
for each failure to timely pay termination wages).
11. Although Butler involved punitive damages, the general limitation on surety liability
that it endorsed from the Restatement is not a special rule for punitive damages.  The
limitation applies to any statutory liability designed to serve as a penalty rather than as
compensation for losses arising directly from the breach of the duties secured by the bond. 
See Restatement (First) at § 181 (giving illustrations and citing cases). Consequently,
treble damages and similar forms of penalties for nonpayment of wages or violation of
prevailing wage laws generally are not recoverable from a construction bond.  See 19 ALR
5th 900 (1994) (collecting representative cases and so observing).
12. The general principle of suretyship, as originally stated in the 1941 Restatement
(First), now expressly applies to statutorily required bonds.  Under the Restatement (Third)
of Suretyship & Guaranty § 73 (1996), "[w]hen the secondary obligation is a legally
mandated bond, that obligation does not include any penalties imposed on the principal
obligor for failure to fulfill the underlying obligation unless the secondary obligation so
provides."  The commentary to the Restatement explains:
"a.  General principle.  When a secondary obligor issues a
legally mandated bond, the secondary obligor assumes liability for
losses resulting from the failure of the principal obligor to fulfill its
underlying obligation.  Sometimes the law also imposes a penalty on
the principal obligor for failure to fulfill that obligation.  Such a
penalty, however, is typically considered punitive rather than
compensatory. * * *
"If, of course, the law requiring the issuance of the legally
mandated bond provides that any secondary obligation entered into in
furtherance of the law is deemed to provide for the penalty, that penalty
is covered by the secondary obligation."
Id. at § 73 comment a.  The comment cites Butler as exemplary of the principle.  Id.
13. Plaintiffs attempt to argue that the penalty wages are compensation for work
actually performed.  The text of the statute is to the contrary.  See ORS 652.150(1)
(penalty wages accrue after "employment ceases," for "willful" late payment, and are
expressly characterized as a "penalty" for the failure to pay the employee's wages or
compensation when due).  So is our prior case law.  Nordling, 205 Or at 326; State ex rel
Nilsen v. Ore. Motor Ass'n, 248 Or 133, 136, 432 P2d 512 (1967) (under ORS 652.140(1)
and ORS 652.150(1), the obligation to pay penalty wages arises for late payment of
"wages," which are all earned compensation that the employer owes for the employee's
personal services).
14. That understanding is reinforced by the cross-reference to ORS 279.029.  That
statute requires a contractor on a public works project to obtain "a good and sufficient
bond * * * in a sum equal to the contract price for the faithful performance of the
contract."  ORS 279.029(4)(b) (emphasis added).  Under general suretyship principles,
bond language guaranteeing "faithful performance" of the principal's underlying
obligations generally imposes liability on the surety for losses due to the principal's
defaults, not for penalties that the law may impose for the defaults.   Restatement (First) at
§ 181 comment a.
15. See ORS 279.350(2) (once a contract for a public works project is executed, a
contractor may not challenge "the amount" of the prevailing rate of wage in any legal
proceeding); ORS 279.350(3) (it is not a defense in any legal proceeding that the correct
prevailing rate of wage "is less than the amount" required by the specifications for the
public contract); ORS 279.350(4) (public works contractors must post the "prevailing
wage rates" for each project in a "conspicuous" place; no provision requiring contractor to
post date on which wages must be paid); ORS 279.350(5) (employer must post notice
describing fringe benefits owed as part of contractor's prevailing wage obligation); ORS
279.350(6) (subject to specified exceptions, no portion of prevailing rate of wage can be
paid by person other than the contractor); ORS 279.350(7) (no person may take any action
that circumvents payment of the prevailing rate of wage, including "reducing an
employee's regular rate of pay" in a way that would offset the prevailing wage rate).
16. ORS 279.312(1)(a) directs public works contracts to include a clause that the
contractor must "[m]ake payment promptly, as due, to all persons supplying to such
contractor labor or material" for the project.  In turn, ORS 279.314 identifies the remedies
to be contractually specified for a contractor's failure, neglect, or refusal to promptly pay a
claim for labor or materials.  See ORS 279.314(1) (contract must provide that public
contracting agency may pay "claim for labor" and charge the amount paid against funds
owed to the contractor); ORS 279.314(2) (contract must, in limited circumstances, obligate
contractor to pay interest on amounts not paid promptly).  Those remedies do not include
liquidated damages, nor do they cross-reference ORS 279.356, which provides for
liquidated damages for violating the prevailing wage rate requirement.
17. Beyond relying on those statutes, BOLI's argument for a contrary interpretation of
ORS 279.350 is policy-based.  BOLI asserts that, if late payment of prevailing wages is
not deemed a violation of ORS 279.350, then public works contractors could delay
payment of wages indefinitely, which would run afoul of the goal of providing workers on
public works contracts with economic security in the form of a fair wage.  BOLI's
arguments disregard that the same set of statutes that creates the obligation to pay on a
particular date or within a particular time of discharge also creates remedies to enforce
compliance with those obligations.  As we have discussed, Oregon workers in general are
entitled to the time-of-payment protections of ORS chapter 652.  Workers on public works
contracts share those rights and remedies in common with other workers.
18. As many as 40 states have adopted "little Davis-Bacon Acts" of their own and
numerous local jurisdictions have adopted "micro Davis-Bacon Acts" providing prevailing
wage rate guarantees as well. See Lisa Morowitz, Government Contracts, Social
Legislation, and Prevailing Woes:  Enforcing the Davis Bacon Act, 9 In Pub Interest 29,
30, 30 n 5 (1989) (describing prevalence of state and local prevailing wage rate
provisions).
19. In relying on federal court interpretations of FLSA, the dissent observes that the
liquidated damages remedy provided by ORS 279.356(1) is worded "virtually
identical[ly]" to that of the FLSA, and that the Davis-Bacon Act contains no similar
remedy.  See ___ Or at ___, ___ (Walters, J., dissenting) (slip op at 8, 10).  That much is
true.  See Universities Research Assn. v. Coutu, 450 US 754, 776, 782, 101 S Ct 1451, 67
L Ed 2d 662 (1981) (Davis-Bacon Act gives worker an action against contractor or
construction bond for unpaid back wages; 1932 amendment imposing additional penalties
for wage rate violation was passed by Congress but vetoed by the President).  The dissent's
observation begs the question, however.  The issue here is not what remedy arises for a
violation of the prevailing wage rate obligation imposed by ORS 279.350.  The issue is: 
what is the nature of that obligation?  The Davis-Bacon Act, not FLSA, is the federal act
on which the substantive prevailing wage rate obligation was modeled.
20. Contrary to the dissent's interpretation of Oregon's prevailing wage rate law, a FLSA
violation is triggered by a failure to pay within a reasonable time, not a failure to pay on a
regular payday.  See, e.g., Rogers v. City of Troy, New York, 148 F3d 52, 56-58 (2d Cir
1998) (prompt payment requirement under FLSA is not tied to employer's obligation to
tender wages on payday, but instead depends on whether employer has unreasonably
delayed making payment, given the objective circumstances); see also 29 CFR § 778.106
(2007) (prompt payment requirement for overtime is not tied to agreed payday, but instead
is satisfied if employer pays overtime as soon as practicable; employer may delay for a
period reasonably necessary to compute and arrange for payment of the amount due).  The
Ninth Circuit's decision in Biggs appears to be the only federal case holding that the FLSA
"prompt payment" obligation requires wages to be paid on payday, regardless of why the
employer tendered them late.  1 F3d at 1539-41.  Biggs thus appears to be an isolated
precedent that no other federal court has followed.
21. The dissent's discussion of the interplay between the statute guaranteeing a regular
payday (ORS 652.120) and the state minimum wage laws (ORS 653.025 and ORS
653.055) strays particularly far from the legal issue that this case presents.  See ___ Or at
___, n 4, ___ n 7 (Walters, J., dissenting) (slip op at 4 n 4, 10 n 7).  None of those statutes
is involved in this case.  The interplay -- if any -- between them has not been examined or
decided by this court, and any discussion of them would be and is dictum.
22. Like the majority, I refer to the 1999 versions of the pertinent statutes in ORS
chapter 279.
23. As noted by the majority, the legislature repealed ORS
chapter 279 in 2003.  ___ Or at ___ (slip op at 2 n 2).  However,
the 1999 versions of the provisions of that chapter were in
effect at the time of the relevant events in this action, so I
refer to those versions throughout this dissent.
24. As the majority acknowledges, the prevailing wage statute imposes the same
liability on sureties as it imposes on contractors.  ___ Or at ___ (slip op at 14-15).  ORS
279.356(1).  I will, for simplicity's sake, use the term contractor in this dissent, but my
conclusions apply to contractors' sureties as well.
25. Chapter 652 does contain a statute that requires employers to pay employees not
later than the end of the first business day after discharge.  ORS 652.140.  ORS 652.150
provides a remedy for an employer's failure to pay wages upon discharge.  That obligation
is separate from and in addition to the obligation to pay current employees on payday. 
Neither ORS 652.150, nor ORS 279.356 indicate that the duties they impose are mutually
exclusive.  Courts that have been faced with the argument that the termination penalty is
an exclusive remedy for failure to pay wages owed have rejected that argument, although
some courts have disallowed a double recovery.  See Davis v. Maxima Integrated
Products, 57 F Supp 2d 1056 (D Or 1999) (separate remedies for failure to pay overtime
and failure to pay wages due on termination); 
Cornier v. Paul Tulacz, DVM PC, 176 Or
App 245, 30 P3d 1210 (2001) (separate remedies for failure to pay overtime and failure to
wages due on termination); Hurger v. Hyatt Lake Resort, Inc., 170 Or App 320, 13 P3d
123 (2000) (employee paid on payday so employer only liable for penalty for nonpayment
on termination); Cooper v. Thomason, 2006 WL 2993376 (D Or 2006) (no separate
penalties for same misconduct).  No question of duplicate remedies is presented here
because the majority holds that plaintiffs do not have a claim against their employer's
surety under ORS 652.140.
26. The remedy for violation of the payday statute for employees who are not entitled to
the prevailing wage is set forth in the minimum wage statutes.  ORS 653.025 prohibits an
employer from employing an employee at wages lower than statutorily established
minimum wages. 
27. ORS 279.528(1) provides, in relevant part:"The notice of claim required by
ORS 279.526 shall be sent by registered or certified mail or hand delivered no later than
120 days after the day the person last provided labor or furnished materials or 120 days
after the worker listed in the notice of claim by the Commissioner of the Bureau of Labor
and Industries last provided labor."
28. The  penalty that both the state and federal laws impose
for failure to make timely payment of the  minimum wage is a sum
equal to the amount of the unpaid wage.  Congress imposed its
penalty without regard to the length of time payment is delayed. 
When Oregon adopted that penalty for failure to make timely
payment of the Oregon prevailing wage, it also imposed the
penalty without regard to the length of time payment is delayed. 
Although the Oregon legislature could have a penalty that
increases each day wages remain unpaid, its decision to impose a
substantial penalty for failure to pay the wages owed on the date
they are due does not indicate any less interest in ensuring
prompt payment. 
29. ORS 653.055 provides that any employer who pays an employee less than that
minimum wage applicable to employees generally is liable to the employee for the amount of the
wages and civil penalties.  Courts that have considered the question have held that an employer
that fails to pay an employee the minimum wage on payday violates minimum wage statutes and
must pay penalties.  Pascoe v. Mentor Graphics Corp., 199 F Supp 2d 1034 (D Or 2001); Scott v.
American United Life Ins. Co., 2005 WL 2675185 (2005).