Who is an Independent Contractor and Who is an Employee?
A worker who provides services for remuneration generally will be considered an employee by the courts and state regulatory agencies, unless that worker meets the criteria required of an “independent contractor” (or other exception) with the emphasis falling on the word “independent.”
In making classification determinations, the courts and regulatory agencies weigh certain facts to determine:
1. whether the worker in question is free from direction and control; and/or
2. whether the worker is, as a matter of economic reality, independent of the business to which services are being provided.
While not all agencies utilize the same criteria, you can find the specific tests for each agency on this website under our Rules/Statute
The definition of an “independent contractor” for the Department of Revenue, the Employment Department, the Construction Contractors Board and the Landscape Contractors Board is found at ORS 670.600. These agencies require that the worker meet all
the criteria of ORS 670.600, in order to be considered an independent contractor.
Note that different criteria are utilized by the Bureau of Labor and Industries (BOLI
) and the Department of Consumer and Business Services' Workers Compensation Division
As you review the tests, you should also note that there are a number of considerations which are not determinative in deciding whether a worker is an independent contractor:
1. The creation or use of a business entity, such as a corporation or a limited liability company, by an individual for the purpose of providing services does not, by itself, establish that the individual provides services as an independent contractor.
2. A contract in which the worker is assigned the label of “independent contractor.”
3. Payment to the worker is reported by way of a Form 1099 rather than a Form W2.
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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.