Sponsored by Oregon Business

Rules for contractors: Clarifying jobs

| Print |  Email
Friday, September 01, 2006

For years, employers have struggled to comply with the legal obligations for employees, as opposed to independent contractors, because of conflicting definitions and enforcement policies. These definitions and notices have varied among state agencies. Additionally, Oregon’s test has not been coupled with the test used by the IRS.

The Oregon statutory rules were revised at the first of the year, and the revisions are now more closely aligned with the federal rules. But there is still no guarantee that an individual will have the same status under both federal and state law.

In order to be an independent contractor in Oregon, individuals must meet three of the five following criteria:

  1. Maintain a business location.
  2. Bear the risk of loss related to the business or the provision of services.
  3. Provide contracted services for two or more different persons within a 12-month period, or routinely engaging in business advertising, solicitation or other marketing efforts reasonably calculated to obtain new contracts to provide similar services.
  4. Make a significant investment in the business.
  5. Have the authority to hire other persons to provide or to assist in providing the services and having the authority to fire those persons.

Conversely, the IRS uses a common law test and has traditionally considered 20 factors in making its determination. The factors that the IRS considers are set forth at www.irs.gov.

Employers have an obligation to correctly classify workers. Both the IRS and the State of Oregon will determine whether an employment relationship exists. If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker and penalties. In addition to penalties and interest, the IRS reserves the right to seek civil and criminal sanctions against the employer. The IRS reported in 2004 that during the prior three years, 117 people were sentenced to confinement for criminal violations related to employment taxes.

If you are unable to determine whether a person is an employee or an independent contractor, you can ask the IRS to make that determination. IRS Form SS-8, “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding,” is available online. Oregon’s Department of Consumer & Business Services provides a similar service through its Employer Compliance Unit.

— Peter O. Watts
Associate, Jordan Schrader Attorneys
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

More Articles

How Oregon will survive the loss of Hanjin

March 2015
Friday, February 20, 2015
BY JOE CORTRIGHT | OB CONTRIBUTOR

"Shipping containers to Portland is like waiting for a bus that travels once a day."


Read more...

VIDEO: The 2015 100 Best Companies to Work For in Oregon

The Latest
Friday, February 27, 2015

videothumbVIDEO: 2015 100 Best Companies to work for in Oregon


Read more...

Downtime with the executive director of Greater Portland Inc.

April 2015
Thursday, March 26, 2015

Janet LaBar, Executive director, Greater Portland Inc.


Read more...

All Rise

March 2015
Friday, February 20, 2015
BY AMY MILSHTEIN | OB CONTRIBUTOR

Don’t just sit there. For a healthy workplace, move up and down — and all around.


Read more...

ZoomCare rolls out new on-demand health clinics

News
Monday, March 02, 2015
zoomcarethumbBY KIM MOORE |  OB RESEARCH EDITOR

Portland-based healthcare provider ZoomCare said it plans to “remake American healthcare” by expanding its on-demand urgent care model to emergency, surgery, dental and primary care, among others.


Read more...

Game On

March 2015
Wednesday, February 25, 2015
BY LINDA BAKER | OB EDITOR

The big news at Oregon Business is we’re getting a ping pong table. After reading the descriptions of the 2015 100 Best Companies to Work For in Oregon, a disproportionate number of which feature table tennis in the office, I decided it was time to bring our own workplace into the 21st century. It was a tough call, but it’s lonely at the top, and someone has to make the hard decisions.


Read more...

5 ways successful people kickstart the day

The Latest
Thursday, April 02, 2015
coffeethumbBY JACOB PALMER | DIGITAL NEWS EDITOR

Are mornings the most productive part of the day?  We ask five successful executives how they get off to a good start.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS