72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
 
NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .
 
LC 470
 
                         Senate Bill 40
 
Printed pursuant to Senate Interim Rule 213.28 by order of the
  President of the Senate in conformance with presession filing
  rules, indicating neither advocacy nor opposition on the part
  of the President (at the request of Joint Interim Committee on
  Judiciary for the Oregon State Bar Taxation Section)
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Modifies factors used to determine status of worker as employee
or independent contractor.
 
                        A BILL FOR AN ACT
Relating to independent contractors; amending ORS 576.306 and
  670.600.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 670.600 is amended to read:
  670.600.  { + (1) As used in this section, 'worker' means an
individual.
  (2) + } As used in   { - various provisions of - }  ORS
chapters 316, 448, 656, 657, 671 and 701,   { - an individual or
business entity that - }   { + a worker who  + }performs labor or
services for remuneration   { - shall be - }  { +  is + }
considered to perform the labor or services as an 'independent
contractor'   { - if the standards of this section are met: - }
 { +  unless a relationship of employer and employee exists
between the worker and the person for whom the worker performs
labor or services.
  (3) A relationship of employer and employee exists if the
person for whom the labor or services are performed has the right
to control and direct the worker performing the labor or
services, not only as to the result to be accomplished by the
worker but also as to the details and means by which that result
is accomplished. The employer may actually control and direct the
manner in which the labor or services are performed or may merely
have the right to control and direct the manner in which the
labor or services are performed.
  (4) The factors listed in subsection (5) of this section are a
guide in determining the existence of the right to control and
direct a worker. The degree of importance of each factor varies
depending on the occupation and the factual context in which the
labor or services are performed.
  (5) The person for whom labor or services are performed may
have the right to control and direct a worker if:
 
 
  (a) The worker is required to comply with instructions from
another person about when, where and how the labor or services
must be performed.
  (b) The person for whom the labor or services are performed
trains the worker, including but not limited to requiring an
experienced employee to work with the worker, corresponding with
the worker or requiring the worker to attend meetings.
  (c) The labor or services performed by the worker are
integrated into the business operations of the person for whom
the labor or services are performed.
  (d) The person for whom the labor or services are performed is
concerned about the methods used to accomplish the work as well
as the results if the worker must render the labor or services
personally.
  (e) The person for whom the labor or services are performed
hires, supervises and pays assistants, as opposed to the worker
hiring, supervising and paying other assistants pursuant to a
contract under which the worker is responsible for providing
materials and labor and for the attainment of a result.
  (f) The worker and the person for whom the labor or services
are performed have a continuing relationship. A continuing
relationship may exist when work is performed at frequently
recurring, although irregular, intervals.
  (g) The person for whom the labor or services are performed
establishes set hours of work.
  (h) The worker must devote substantially full time to the
business of the person for whom the labor or services are
performed, and the person has control over the amount of time the
worker spends working and may restrict the worker from doing
other gainful work.
  (i) The labor or services are performed on the premises of the
person for whom the labor or services are performed, especially
if the work could be done elsewhere.
  (j) The worker must perform labor or services in the order or
sequence set by the person for whom the labor or services are
performed, indicating that the worker is not free to follow the
worker's own pattern of work but must follow the established
routines and schedules of the person for whom the labor or
services are performed.
  (k) The worker is required to submit to the person for whom the
labor or services are performed regular or written reports about
the status of the work being performed.
  (L) The worker is paid by the hour, week or month, provided
that this method of payment is not merely a convenient way of
paying a lump sum agreed upon as the cost of a particular job.
  (m) The person for whom the labor or services are performed
ordinarily pays the worker's business or traveling expenses
because the person, to control expenses, generally retains the
right to regulate and direct the worker's business activities.
  (n) The person for whom the labor or services are performed
furnishes significant tools, materials and other equipment to the
worker.
  (o) The worker does not invest in facilities that are used by
the worker in performing labor or services and that are not
typically maintained by a worker, such as the maintenance of an
office.
  (p) The worker does not realize a profit or suffer a loss as a
result of the worker's labor or services, other than the profit
or loss ordinarily realized or suffered by a worker.
  (q) The worker does not perform more than de minimis labor or
services for multiple unrelated persons.
  (r) The worker's labor or services are not available to the
general public on a regular and consistent basis.
  (s) The person for whom the labor or services are performed has
the right to discharge the worker or threaten dismissal, causing
 
the worker to obey the person's instructions about the manner in
which the work is performed.
  (t) The worker has the right to end the worker's relationship
with the person for whom the labor or services are performed at
any time the worker wishes without incurring liability.
  (6) The factors listed in subsection (5) of this section shall
be applied to the extent possible in a manner that is consistent
with the application of federal law to the collection of
employment taxes, including but not limited to the Federal
Insurance Contributions Act, the Federal Unemployment Tax Act and
sections 3401 to 3406 of the Internal Revenue Code, as amended
and in effect on December 31, 2002.
  (7) Notwithstanding subsections (3) to (6) of this section, for
purposes of ORS chapters 316 and 657, in determining a worker's
status as an employee or independent contractor, the provisions
of section 530 of the Revenue Act of 1978 (P.L. 95-600, 530, 92
Stat.) apply in the same manner as those provisions are applied
under federal law. + }
    { - (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 ordinances 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 licensed under ORS chapter 701, if the individual or
business entity provides labor or services for which licensure 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;
and - }
    { - (8) The individual or business entity represents to the
public that the labor or services are to be provided by an
independently established business. Except when an individual or
business entity files a Schedule F as part of the personal income
tax returns and the individual or business entity performs farm
labor or services that are reportable on Schedule C, an
individual or business entity is considered to be engaged in an
independently established business when four or more of the
following circumstances exist: - }
    { - (a) 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; - }
    { - (b) 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; - }
 
    { - (c) 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; - }
    { - (d) Labor or services are performed only pursuant to
written contracts; - }
    { - (e) Labor or services are performed for two or more
different persons within a period of one year; or - }
    { - (f) 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 omission insurance or liability insurance
relating to the labor or services to be provided. - }
  SECTION 2. ORS 576.306 is amended to read:
  576.306. (1) The commission may contract with an independent
contractor for the performance of any services. However, the
commission may not contract with an independent contractor to
perform the discretionary functions of the commission. ORS
chapters 240 and 279 do not apply to the commission in obtaining
such services, except that no contract for such services shall
take effect until approved by the State Department of Agriculture
as provided in subsection (7) of this section.
  (2) The commission may rent space or acquire supplies and
equipment from any contractor as described in subsection (1) of
this section. ORS chapters 276, 278, 279 and 283 and ORS 291.038
do not apply to such rentals or acquisitions.
  (3) Except as provided in this section, a contractor described
in subsection (1) of this section shall be considered an
independent contractor and not an employee, eligible employee,
public employee or employee of the state for purposes of Oregon
law, including ORS chapters 236, 238, 240, 243, 291, 292, 316 and
652.
  (4) Nothing in this section precludes the state or a commission
from being considered the employer of the contractor described in
subsection (1) of this section for purposes of unemployment
compensation under ORS chapter 657 and ORS 670.600.
  (5) A contractor described in subsection (1) of this section
shall be considered an independent contractor   { - and not a
worker - } for purposes of ORS chapter 656 and ORS 670.600.
  (6) A contractor described in subsection (1) of this section
shall not be considered a public official, public officer, state
officer or executive official for purposes of Oregon law,
including ORS chapters 236, 244, 292, 295 and 297 and ORS 171.725
to 171.785.
  (7) The State Department of Agriculture shall review the
contract described in subsection (1) of this section for the
adequacy of the clauses pertaining to statement of work, starting
and ending dates, consideration, subcontracts, funds authorized
in the budget, amendments, termination, compliance with
applicable law, assignment and waiver, access to records,
indemnity, ownership of work product, nondiscrimination,
successors in interest, attorney fees, tax certification or
merger or any other clause the department deems necessary.
  (8) The Oregon Department of Administrative Services, in
consultation with the State Department of Agriculture, shall
adopt rules necessary for the screening and selection of
independent contractors under this section.
  (9) Except as provided in subsection (8) of this section, the
department may promulgate any rules necessary for the
administration and enforcement of this section.
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