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Standards and Practices

EMPLOYEE VS. INDEPENDENT CONTRAC TOR FEDERAL

STATE

Under common law, every individual who performs services that are subject to the will and control of an employer, as to both what must be done and how it must be done, is an employee. It does not matter that the employer allows the employee discretion and freedom of action, so long as the employer has the legal right to control both the method and the result of the services. An employer must generally withhold income taxes, withhold and pay social security taxes, and pay unemployment taxes on wages paid to an employee. An employer does not generally have to withhold or pay any taxes on payments to independent contractors. The 20 factors listed below have been identified to help indicate whether sufficient control is present to establish an employer/ employee relationship. The degree of importance of each factor varies depending on the occupation and the context in which the services are performed.

Section 1. As used in various provisions of ORS chapters 316, 656, 657 and 701, an individual or business entity that performs labor or services for remuneration shall be considered to perform the labor or services as an “independent contractor” if the standards of this section are met.

1. Instructions. An employee is required to comply with instructions about when, where and how to work. Even if no instructions are given, the control factor is present if the employer has the right to give instructions. 2. Training. An employee is trained to perform services in a particular manner. Independent contractors ordinarily use their own methods and receive no training from the purchasers of their services. 3. Integration. An employee’s services are integrated into the business operations because the services are important to the success or continuation of the business. This shows that the employee is subject to direction and control. 4. Services rendered personally. An employee renders services personally. This shows that the employer is interested in the methods as well as the results. 5. Hiring assistants. An employee works for an employer that hires, supervises and pays assistants. An independent contractor hires, supervises and pays assistants under a contract that requires him or her to provide materials and labor and to be responsible only for the result. 6. C ontinuing relationship. An employee has a continuing relationship with an employer. This indicates that an employer/employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals. 7. Set hours of work. An employee has set hours of work established by an employer. An independent contractor is the master of his or her own time. 8. Full-time work. An employee normally works full time for an employer. An independent contractor can work when and for whom he or she chooses. 9. Work done on premises. An employee works on the premises of an employer, works on a route or at a location the employer designates. 10. Order or sequence set. An employee must perform services in the order or sequence set by an employer. 11. Reports. An employee submits reports to an employer. This shows that the employee must account to the employer for his or her actions. 12. Payments. An employee is paid by the hour, week or month. An independent contractor is paid by the job or on a straight commission. 13. Expenses. An employee’s business and travel expenses are paid by an employer. This shows the employee is subject to regulation and control. 14. Tools and materials. An employee is furnished significant tools, materials and other equipment by an employer. 15. Investment. An independent contractor has significant investment in the facilities he or she uses in performing services for someone. 16. Profit or loss. An independent contractor can make a profit or suffer a loss. 17. Works for more than one person or firm. An independent contractor gives his or her services to a multiple of unrelated persons or firms at the same time. 18. Offers services to the general public. An independent contractor makes his or her services available to the general public. 19. Right to fire. An employee can be fired by an employer. An independent contractor cannot be fired so long as he or she produces a result that meets their contract specifications. 20. Right to quit. An employee can quit his or her job at anytime without incurring liability. An independent contractor agrees to complete a specific job and is responsible for its satisfactory completion, or is legally obligated to make good for failure to complete the job.

40  SourceOregon 2017 | A Publication of the OMPA

1. The individual or business entity providing the labor or services is free from direction and control over the means and manner of providing the labor or services, subject only to the right of the person for whom the labor or services are provided to specify the desired results. 2. The individual or business entity providing labor or services is responsible for obtaining all assumed business registrations or professional occupation licenses required by state law or local government ordinance for the individual or business entity to conduct the business. 3. The individual or business entity providing labor or services furnishes the tools or equipment necessary for performance of the contracted labor or services. 4. The individual or business entity providing labor or services has the authority to hire and fire employees to perform the labor or services. 5. Payment for the labor or services is made upon completion of the performance of specific portions of the project or is made on the basis of an annual or periodic retainer. 6. The individual or business entity providing labor or services is registered under ORS chapter 701, if the individual or business entity provides labor or services for which such registration is required. 7. Federal and state income tax returns in the name of the business or a business Schedule C or Farm Schedule F as part of the personal income tax return were filed for the previous year if the individual or business entity performed labor or services as an independent contractor in the previous year. 8. The individual or business entity represents to the public that the labor or services are to be provided by an independently established business. An individual or business entity is considered to be engaged in an independently established business when four or more of the following circumstances exist: 9. The labor or services are primarily carried out at a location that is separate from the residence of an individual who performs the labor or services, or are primarily carried out in a specific portion of the residence, which portion is set aside as the location of the business. 10. Commercial advertising or business cards as is customary in operating similar businesses are purchased for the business, or the individual or business entity has a trade association membership. 11. Telephone listing and service are used for the business that is separate from the personal residence listing and service used by an individual who performs the labor or services. 12. Labor or services are performed only pursuant to written contracts 13. Labor or services are performed for two or more different persons within a period of one year. 14. The individual or business entity assumes financial responsibility for defective workmanship or for service not provided as evidenced by the ownership of performance bonds, warranties, errors and omissions insurance or liability insurance relating to the labor or ser vices to be provided.

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SourceOregon 2017  

Enjoy OMPA's annual publication exclusively highlighting the award winning work of Oregon Media Production Association members. 2017 theme...

SourceOregon 2017  

Enjoy OMPA's annual publication exclusively highlighting the award winning work of Oregon Media Production Association members. 2017 theme...

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