Text Size:   A+ A- A   •   Text Only
Find     
Site Image
Employee and independent contractor FAQ's
 

What is control?
 
What is a 1099?
 
Does how an individual is paid determine whether they are an independent contractor?
 
What if I have a signed contract saying the person working for me is an independent contractor?
 
Does a professional or trade license make you an independent contractor?
 
Can I hire an independent contractor and still maintain control?
 
Do employers pay workers’ compensation or unemployment benefits for independent contractors?
 
Can someone become an independent contractor by simply forming a business entity, such as a corporation, partnership, or limited liability company?
 
My current employer wants me to become an independent contractor. Is this allowed?
 
What if I am required to sign a contract?
 
What if I say I am an independent contractor and I am not?
 
 
What is control?
Control refers to how you regulate or direct (or have the power to regulate or direct) the activities of the person who is paid for the work. Control arises when conditions are “narrowly set” as to how the job is to be performed in the manner or method used to do the work.
 
For example, one factor in determining control occurs if a person pays another to perform services and specifies when, where and how a service is to be performed even though acceptable alternatives that will produce the same contracted outcome are available.

 
 
What is a 1099?
A 1099 is a federal form used to report compensation paid for services rendered in a calendar year to a person not considered an employee. The 1099 indicates that the employer has treated an individual or partnership as an independent contractor.

 
 
Does how an individual is paid determine whether they are an independent contractor?
Not necessarily. The way a person is paid is not the single determining factor in whether they are an independent contractor. The independent contractor must be free from the direction and control over the means and manner of production of the service, regardless of the method of payment. Generally, paying by the hour, week, month, or other time period is the method most often used to pay employees.
 
 
What if I have a signed contract saying the person working for me is an independent contractor?
A contract, by itself, does not determine whether a person is an employee or independent contractor.
 
 
Does a professional or trade license make you an independent contractor?
If there is direct evidence of the right to or the actual exercise of control, then it doesn’t matter whether the individual has a professional license.
 
 
Can I hire an independent contractor and still maintain control?
You can’t hire an independent contractor and treat them as an employee. If you do, then the individual is an employee and must be treated as such. An independent contractor is free from direction and control.
 
 
Do employers pay workers compensation or unemployment benefits for independent contractors?
Independent contractors are responsible for their own benefits. They must personally ensure their federal, state and other taxes are timely paid, including payment of estimated tax when needed.
 
 
Can someone become an independent contractor by simply forming a business entity, such as a corporation, partnership, or limited liability company?
No. The creation or use of a business entity, such as a corporation, partnership, or limited liability company, for the purposes of providing services does not, by itself, establish that the entity provides services as an independent contractor.
 
 
My current employer wants me to become an independent contractor. Is this allowed?
If changes occur we look at the right of your employer to direct and control your work and other related considerations. Your employer might treat you as an independent contractor, but you must actually qualify as one under the law or your employer is in error. If you think you are misclassified, contact the agencies listed on this site.
 
 
What if I am required to sign a contract?
A contract cannot, by itself, determine that you are an independent contractor.
 
 
What if I say I am an independent contractor and I am not?
You would be an employee. To that extent, your employer is required to perform the acts of an employer, such as paying unemployment taxes, as required by law.
 
 
It is not possible to present all issues to be considered in all situations. For more information than presented here, contact your  local tax auditor.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

The 2005 legislature modified the Independent Contractor statutes. The new statutes take effect January 1, 2006.
 
This page reflects the position of the Employment Department.
 
If you have any questions about whether you are properly classified as an employee or independent contractor, contact
  • Employment Department Tax Section (503-947-1488) or,
  • contact your local tax auditor
 
ORS 670.600 applies only to the Oregon Department of Revenue, Employment Department, Construction Contractors Board, and Landscape Contractors Board. These agencies require that the person performing the work must meet all the criteria of that law.
 
For information about workers' compensation and Oregon labor law, please contact the Workers' Compensation Division and Bureau of Labor and Industries.
 
Return to Oregon Independent Contractors Home Page