The Modular Building Institute filed suit against Oregon over a state wage mandate set to take effect July 1, 2026. The lawsuit challenges House Bill 2688, which requires prevailing wages on bespoke modular units manufactured outside Oregon and brought into the state.
The rule expands Oregon's prevailing wage requirements beyond in-state factories to cover custom-built modules sourced from out-of-state producers. The MBI argues this creates competitive disadvantages for modular construction, a building method that typically costs less than traditional site-built work and accelerates project timelines.
Prevailing wage rules mandate employers pay workers rates set by government wage boards, typically 1.5 to 2.5 times standard wages. Oregon already applies these requirements to in-state construction and modular manufacturing. HB 2688 closes what the state views as a loophole allowing developers to import modular units built at lower wages without triggering prevailing wage obligations.
For builders, the new rule raises costs on out-of-state module purchases, potentially eroding modular construction's price advantage over traditional methods. General contractors and developers eyeing modular solutions for projects will face steeper material costs starting mid-2026. This could shift project economics and slow adoption of modular building in Oregon, particularly on public works and prevailing wage projects where cost-plus bids already assume higher labor costs.
For modular manufacturers outside Oregon, the rule narrows their addressable market in the state. Producers in Washington, California, and other neighboring states lose pricing leverage against in-state competitors.
Modular advocates argue the rule picks winners. Prevailing wage mandates on modules but not equivalent site-built work create uneven playing fields. The MBI contends Oregon's approach discourages construction innovation and reduces housing supply options at a time when Oregon faces affordability pressures.
The suit