An Oregon independent contractor agreement is a contract between a client and an independent contractor that describes the nature of freelance work. It highlights the payment schedule, the scope of the work, the reimbursement policy for expenses, and confidentiality clauses.
- Worker Classification: A variation of the ABC test
- Tax Structure: Graduated-Rate Income Tax
- Definition: ORS 670.600
- At-Will Employment: Yes
Independent Contractor Definition
An independent contractor in Oregon is someone who provides services to a client while maintaining control and direction over how they provide the services. They must meet the conditions of the modified ABC test, which is discussed in more detail below. If someone doesn’t meet the standards of Oregon’s modified ABC test, they’re classified as an employee.
Worker Classification Test
Oregon uses a common law, modified version of the ABC test to determine a worker’s classification as an employee or independent contractor. People sometimes refer to this test as an AC test.
To classify a worker as an independent contractor, the Oregon Employment Department must find the following:
- A worker is free from the client’s control and direction over their services; and
- A worker is generally engaged in an independently established business, which can be established by proving any three of the following five factors:
- The worker has a business location that is separate from the business location.
- The worker bears a risk of loss related to the business.
- The worker provides their contracted services to at least two entities within a 12-month period, or they engage in marketing efforts to secure new contracts.
- The worker makes a significant investment in the business.
- The worker has the authority to hire other workers to help provide service.
Rights and Responsibilities
Many of Oregon’s labor and employment rights stem from the worker’s classification as an employee. Workers classified as independent contractors lose significant rights, including the following: [1]
- Minimum wage laws
- Overtime pay
- Rest periods
- Worker’s compensation
Filing for Unemployment
Independent contractors in Oregon aren’t eligible to file for unemployment.
State Taxes
Oregon uses the same test as unemployment compensation benefits to make tax and revenue determinations.
Oregon businesses/clients don’t withhold state or federal taxes from the wages of their independent contractors. Independent contractors are responsible for paying their employment taxes. At the end of the year, a client should provide their independent contractor with a Form 1099 to facilitate their payment of due taxes, including:
- State income taxes
- Federal income taxes
- Self-employment taxes
Sample
View our Oregon independent contractor agreement template and download it as a PDF or Word file below:
