An Oklahoma independent contractor agreement is a document that explains the services a contractor will provide to a client. It dictates the scope of the services, the payment amount and method, and the details of any reimbursements for associated expenses.
- Worker Classification: A variation of the ABC test
- Tax Structure: Graduated-Rate Income Tax
- Definition: 40 OK Stat § 1-210
- At-Will Employment: Yes
Independent Contractor Definition
Under Oklahoma law, the state considers workers to be employees until proven otherwise. Employment means services performed by an individual for remuneration or under contract until you can prove that a worker was, is, and will continue to be free from control over their services.
Independent contractors are individuals who can satisfy Prongs A + B or Prongs A + C of the ABC test variation, which is discussed in more detail below. Employees are individuals who cannot satisfy the ABC test variation.
Worker Classification Test
Oklahoma uses a variation of the ABC test to determine whether a worker is an employee or an independent contractor. This test is sometimes called an “A + B/C test.” This is because you must prove prong A and either prong B or C to prove a worker is an independent contractor. [1] The prongs are:
- Prong A: The worker has freedom of direction and control over their provided services under their independent contractor agreement.
- Prong B: The worker’s provided service is outside the company’s usual course of business and performed outside the company’s places of business.
- Prong C: The worker regularly engages in their independently established business.
You don’t need to prove all three prongs to confirm the presence of a contractor-client relationship. But you must prove Prongs A + B or A + C to fulfill the requirements. The Oklahoma Employment Security Commission will base its classification of a worker on the results of this test.
Rights and Responsibilities
The worker’s classification as an employee is the basis for many employment rights. Workers who can pass the A + B/C test in Oklahoma have reduced rights because they receive the independent contractor classification. They generally lack rights such as minimum wage requirements, unemployment benefits, and overtime pay.
State Taxes
The client doesn’t withhold income tax for any independent contractor they hire. Instead, the independent contractor retains responsibility for ensuring they meet their state tax obligations.
The federal self-employment tax rate that all independent contractors, including those in Oklahoma, are responsible for paying is 15.3%. [2]
Filing for Unemployment
Independent contractors generally cannot file for unemployment benefits in Oklahoma. An individual may attempt to file for unemployment if they think they’ve been misclassified as an independent contractor.
Compensation for Work Injuries
For worker’s compensation, Oklahoma courts examine 11 factors to determine a worker’s classification as an independent contractor or employee. Some of these factors include the skill necessary for the particular occupation, the party that supplies the required materials, and the place of work for the worker. [3]
Sample
Download our Oklahoma independent contractor agreement template below as a PDF or Word file:
