Oregon’s Independent Contractor Laws
A worker providing services for pay is generally considered an employee by Oregon regulatory agencies - unless that worker meets the requirements for an independent contractor.
Statutes and Rules
Oregon Revised Statute (ORS)
670.600 (summarized below) defines the term “independent contractor” for the following state agencies:
• Department of Revenue
• Employment Department
• Department of Consumer & Business Services’ Workers’ Compensation Division
• Construction Contractors Board
• Landscape Contractors Boards
A summary of the criteria used by each of these state agencies is available in
chart form.
Under this law, workers may be properly classified as independent contractors provided they:
- Are free from direction and control, beyond the right of the service recipient to specify the desired result, AND
- Are licensed under ORS 671 or 701 (State Landscape Architect Board or Landscape Contractors Board and State Board of Architect Examiners or Construction Contractors Board) if licensure is required for the service, AND
- Are responsible for other licenses or certificates necessary to provide the service AND
- Are customarily engaged in an “independently established business.”
To qualify under the law, an “independently established business” must meet 3 out of the following 5 criteria):
- Maintain a business location that is:
a. Separate from the business or work location of the service recipient; or
b. that is in a portion of their own residence that is used primarily for business. - Bear the risk of loss, shown by factors such as:
a. Entering into fixed price contracts;
b. Being required to correct defective work;
c. Warranting the services provided; or
d. Negotiating indemnification agreements or purchasing liability insurance, performance bonds, or errors and omissions insurance. - Provide contracted services for two or more different persons within a 12-month period, or routinely engage in business advertising, solicitation or other marketing efforts reasonably calculated to obtain new contracts to provide similar services.
- Make a significant investment in the business through means such as:
a. Purchasing tools or equipment necessary to provide the services;
b. Paying for the premises or facilities where the services are provided; or
c. Paying for licenses, certificates or specialized training required to provide the services. - Have the authority to hire and fire other persons to provide assistance in performing the services.
- A person who files tax returns with a Schedule F and also performs agricultural services reportable on a Schedule C is not required to meet the independently established business requirements
- Establishing a business entity such as a corporation or limited liability company, does not, by itself, establish that the individual providing services will be considered an independent contractor.
ORS 670.600 applies only to the Oregon Department of Revenue, Employment Department, Department of Consumer & Business Services’ Workers’ Compensation Division, Construction Contractors Board, and Landscape Contractors Board. These agencies require that the person performing the work meet all the criteria of that law to be considered an independent contractor.
For information about this topic under Oregon labor laws, please contact the
Bureau of Labor and Industries. This agency, along with the IRS, uses a different method for determining whether a worker is subject to employment laws. A summary of the test used by BOLI can be found on this chart.
There are many exceptions to what is considered “employment” in the law when it comes to Unemployment Insurance and Workers’ Compensation Insurance.
Details of statutory exceptions for employment law can be found in ORS 657.030, 657.040, and 657.043 through 094.The statutory exceptions for workers’ compensation law can be found in ORS 656.005(30), 656.027, 656.031, and 656.037. Please note that if you are unsure whether someone performing a service is subject to employment law or workers' compensation law, contact us with your questions.
Hearings and Decisions
Tax assessments, orders, and decisions made by ICN agencies are appealable decisions. There are various appeal paths depending on the agency issuing the decision. Reviews made by the Court of Appeals and Supreme Court are not free and must be paid for by the appellant. Court of Appeals and Supreme Court decisions are part of the public record, while hearings taking place at the Office of Administrative Hearings remain confidential. Below you will find a link to legal decisions related to independent contractor issues, taxation issues, and other employment cases. Any decision featured on this website that is not public record has been redacted to remove all identifying information. Public record cases remain in their original, unedited states.
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The Oregon Employment Department has a site for viewing redacted tax hearing decisions online, including hearings regarding independent contractor classification. Please visit https://secure.emp.state.or.us/tax/decisions/index.cfm and select the criteria with which you would like to search.
To view any of these cases online or research cases that may be related to these decisions, please visit the Oregon Judicial Department's website.
Disclaimer: The above information is provided as a summary and teaching guide. Nothing on this website is intended as legal advice. If you need legal advice, please consult an attorney. We attempt to update the information on this website as soon as practicable following changes or developments in the laws and rules affecting Oregon employers, but we make no warranties or representations, express or implied, about whether the information provided is current. We urge you to check the applicable statutes and administrative rules yourself and to consult with legal counsel prior to taking action that may invoke employee rights or employer responsibilities or omitting to act when required by law to act.