73rd OREGON LEGISLATIVE ASSEMBLY--2005 Regular Session
Enrolled
Senate Bill 323
Sponsored by Senator WALKER, Representative BROWN (at the request
of Independent Contractors Task Force)
CHAPTER ................
AN ACT
Relating to independent contractors; creating new provisions;
amending ORS 310.800, 316.162, 657.040, 670.600 and 670.605;
and repealing ORS 314.013.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 670.600 is amended to read:
670.600. { - As used in various provisions of ORS chapters
316, 448, 656, 657, 671 and 701, an individual or business entity
that performs labor or services for remuneration shall be
considered to perform the labor or services as an 'independent
contractor' if the standards of this section are met: - }
{ - (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
Enrolled Senate Bill 323 (SB 323-ACCA) Page 1
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. - }
{ + (1) As used in this section:
(a) 'Individual' means a natural person.
(b) 'Person' has the meaning given that term in ORS 174.100.
(c) 'Services' means labor or services. + }
{ + (2) As used in ORS chapters 316, 656, 657, 671 and 701, '
independent contractor' means a person who provides services for
remuneration and who, in the provision of the services:
(a) Is free from direction and control over the means and
manner of providing the services, subject only to the right of
the person for whom the services are provided to specify the
desired results;
(b) Except as provided in subsection (4) of this section, is
customarily engaged in an independently established business;
(c) Is licensed under ORS chapter 671 or 701 if the person
provides services for which a license is required under ORS
chapter 671 or 701; and
(d) Is responsible for obtaining other licenses or certificates
necessary to provide the services.
(3) For purposes of subsection (2)(b) of this section, a person
is considered to be customarily engaged in an independently
established business if any three of the following requirements
are met:
(a) The person maintains a business location:
(A) That is separate from the business or work location of the
person for whom the services are provided; or
(B) That is in a portion of the person's residence and that
portion is used primarily for the business.
(b) The person bears the risk of loss related to the business
or the provision of services as shown by factors such as:
(A) The person enters into fixed-price contracts;
(B) The person is required to correct defective work;
Enrolled Senate Bill 323 (SB 323-ACCA) Page 2
(C) The person warrants the services provided; or
(D) The person negotiates indemnification agreements or
purchases liability insurance, performance bonds or errors and
omissions insurance.
(c) The person provides contracted services for two or more
different persons within a 12-month period, or the person
routinely engages in business advertising, solicitation or other
marketing efforts reasonably calculated to obtain new contracts
to provide similar services.
(d) The person makes a significant investment in the business,
through means such as:
(A) Purchasing tools or equipment necessary to provide the
services;
(B) Paying for the premises or facilities where the services
are provided; or
(C) Paying for licenses, certificates or specialized training
required to provide the services.
(e) The person has the authority to hire other persons to
provide or to assist in providing the services and has the
authority to fire those persons.
(4) Subsection (2)(b) of this section does not apply if the
person files a Schedule F as part of an income tax return and the
person provides farm labor or farm services that are reportable
on Schedule C of an income tax return.
(5) For purposes of determining whether an individual provides
services as an independent contractor:
(a) 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.
(b) When the individual provides services through a business
entity, such as a corporation or a limited liability company, the
provisions in subsection (2), (3) or (4) of this section may be
satisfied by the individual or the business entity. + }
SECTION 2. ORS 670.600, as amended by section 5, chapter 704,
Oregon Laws 2003, is amended to read:
670.600. { - As used in various provisions of ORS chapters
448, 656, 657, 671 and 701, an individual or business entity that
performs labor or services for remuneration shall be considered
to perform the labor or services as an 'independent contractor'
if the standards of this section are met: - }
{ - (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; - }
Enrolled Senate Bill 323 (SB 323-ACCA) Page 3
{ - (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. - }
{ + (1) As used in this section:
(a) 'Individual' means a natural person.
(b) 'Person' has the meaning given that term in ORS 174.100.
(c) 'Services' means labor or services.
(2) As used in ORS chapters 316, 656, 657, 671 and 701, '
independent contractor' means a person who provides services for
remuneration and who, in the provision of the services:
(a) Is free from direction and control over the means and
manner of providing the services, subject only to the right of
the person for whom the services are provided to specify the
desired results;
(b) Except as provided in subsection (4) of this section, is
customarily engaged in an independently established business;
(c) Is licensed under ORS chapter 671 or 701 if the person
provides services for which a license is required under ORS
chapter 671 or 701; and
Enrolled Senate Bill 323 (SB 323-ACCA) Page 4
(d) Is responsible for obtaining other licenses or certificates
necessary to provide the services.
(3) For purposes of subsection (2)(b) of this section, a person
is considered to be customarily engaged in an independently
established business if any three of the following requirements
are met:
(a) The person maintains a business location:
(A) That is separate from the business or work location of the
person for whom the services are provided; or
(B) That is in a portion of the person's residence and that
portion is used primarily for the business.
(b) The person bears the risk of loss related to the business
or the provision of services as shown by factors such as:
(A) The person enters into fixed-price contracts;
(B) The person is required to correct defective work;
(C) The person warrants the services provided; or
(D) The person negotiates indemnification agreements or
purchases liability insurance, performance bonds or errors and
omissions insurance.
(c) The person provides contracted services for two or more
different persons within a 12-month period, or the person
routinely engages in business advertising, solicitation or other
marketing efforts reasonably calculated to obtain new contracts
to provide similar services.
(d) The person makes a significant investment in the business,
through means such as:
(A) Purchasing tools or equipment necessary to provide the
services;
(B) Paying for the premises or facilities where the services
are provided; or
(C) Paying for licenses, certificates or specialized training
required to provide the services.
(e) The person has the authority to hire other persons to
provide or to assist in providing the services and has the
authority to fire those persons.
(4) Subsection (2)(b) of this section does not apply if the
person files a Schedule F as part of an income tax return and the
person provides farm labor or farm services that are reportable
on Schedule C of an income tax return.
(5) For purposes of determining whether an individual provides
services as an independent contractor:
(a) 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.
(b) When the individual provides services through a business
entity, such as a corporation or a limited liability company, the
provisions in subsection (2), (3) or (4) of this section may be
satisfied by the individual or the business entity. + }
SECTION 3. ORS 670.605 is amended to read:
670.605. { + (1) + } In accordance with ORS chapter 183, those
agencies responsible for the administration of ORS 671.510 to
671.710 and ORS chapters 316, 656, 657 and 701 jointly shall
adopt rules to carry out the provisions of ORS 670.600.
{ + (2) The agencies responsible for the administration of
ORS 671.510 to 671.710 and ORS chapters 316, 656, 657 and 701
shall cooperate as necessary in their compliance and enforcement
activities to ensure among the agencies the consistent
interpretation and application of ORS 670.600. + }
Enrolled Senate Bill 323 (SB 323-ACCA) Page 5
SECTION 3a. { + If House Bill 2446 becomes law, section 3 of
this 2005 Act (amending ORS 670.605) is repealed and ORS 670.605,
as amended by section 115, chapter 94, Oregon Laws 2005 (Enrolled
House Bill 2446), is amended to read: + }
670.605. { + (1) + } In accordance with ORS chapter 183, those
agencies responsible for the administration of ORS 671.510 to
671.710 and ORS chapters { + 316, + } 656, 657 and 701 jointly
shall adopt rules to carry out the provisions of ORS 670.600.
{ + (2) The agencies responsible for the administration of
ORS 671.510 to 671.710 and ORS chapters 316, 656, 657 and 701
shall cooperate as necessary in their compliance and enforcement
activities to ensure among the agencies the consistent
interpretation and application of ORS 670.600. + }
SECTION 4. ORS 657.040 is amended to read:
657.040. (1) Services performed by an individual for
remuneration are deemed to be employment subject to this chapter
unless and until it is shown to the satisfaction of the Director
of the Employment Department that { - : - }
{ - (a) Such - } { + the + } individual is an independent
contractor, as that term is defined in ORS 670.600 { + . + }
{ - ; or - }
{ - (b) Such individual has been and will continue to be free
from control or direction over the performance of such services,
both under a contract of service and in fact; and - }
{ - (c) Such individual customarily is engaged in an
independently established business of the same nature as that
involved in the contract of service. - }
(2) A finding that an individual performed services for an
employing unit and earned less than the minimum amount necessary
to qualify for benefits under ORS 657.150 based on earnings from
that employing unit { - shall - } { + may + } not be
considered in determining whether { - such - } { + the + }
service is employment under subsection (1) of this section.
SECTION 5. { + ORS 314.013 is repealed. + }
SECTION 6. ORS 310.800 is amended to read:
310.800. (1) As used in this section:
(a) 'Authorized representative' means a senior citizen who is
authorized by a tax-exempt entity to perform charitable or public
service on behalf of a senior citizen who has entered into a
contract under subsection (2) of this section.
(b) 'Homestead' means an owner-occupied principal residence.
(c) 'Senior citizen' means a person who is 60 years of age or
older.
(d) 'Tax-exempt entity' means an entity that is exempt from
federal income taxes under section 501 (c) of the Internal
Revenue Code, as amended and in effect on December 31, 2002.
(e) 'Taxing unit' means any county, city or common or union
high school district, community college service district or
community college district within this state with authority to
impose ad valorem property taxes.
(2) A tax-exempt entity may establish a property tax work-off
program pursuant to which a senior citizen may contract to
perform charitable or public service in consideration of payment
of property taxes extended against the homestead of the senior
citizen and billed to the senior citizen. For purposes of ORS
chapters 316 and 656, and notwithstanding ORS { - 314.013
or - } 670.600 or other law, a senior citizen who enters into a
contract under this subsection shall be considered an independent
contractor and not a worker or employee with respect to the
services performed pursuant to the contract. Nothing in this
Enrolled Senate Bill 323 (SB 323-ACCA) Page 6
section precludes a taxing unit from being considered an
employer, for purposes of unemployment compensation under ORS
chapter 657, of a senior citizen who enters into a contract under
this section.
(3) A taxing unit may enter into an agreement with a tax-exempt
entity that has established a property tax work-off program.
Pursuant to the agreement the taxing unit may accept, as
volunteer and public service, the services of a senior citizen
who has entered into a contract described in subsection (2) of
this section or an authorized representative.
(4) A taxing unit may provide funds or make grants to any
tax-exempt entity that has established a property tax work-off
program for use to carry out the program.
SECTION 7. ORS 316.162, as amended by section 6, chapter 704,
Oregon Laws 2003, is amended to read:
316.162. As used in ORS 316.162 to 316.219:
(1) 'Number of withholding exemptions claimed' means the number
of withholding exemptions claimed in a withholding exemption
certificate in effect under ORS 316.182, except that if no such
certificate is in effect, the number of withholding exemptions
claimed is considered to be zero.
(2) 'Wages' means remuneration for services performed by an
employee for an employer, including the cash value of all
remuneration paid in any medium other than cash, except that '
wages' does not include remuneration paid:
(a) For active service in the Armed Forces of the United States
as to which no withholding is required by the Internal Revenue
Code.
(b) To an employee of a common carrier to the extent that 49
U.S.C. 14503 and 40116 prohibit the remuneration from withholding
for state income taxes.
(c) For domestic service in a private home, a local college
club or a local chapter of a college fraternity or sorority.
(d) For casual labor not in the course of the employer's trade
or business.
(e) To an employee whose services to the employer consist
solely of labor in connection with the planting, cultivating or
harvesting of seasonal agricultural crops if the total amount
paid to such employee is less than $300 annually.
(f) To seamen who are exempt from garnishment, attachment or
execution under title 46 of the United States Code.
(g) To persons temporarily employed as emergency forest fire
fighters.
(h) To employees' trusts exempt from tax under provisions of
the federal Internal Revenue Code.
(i) For services performed by a duly ordained, commissioned or
licensed minister of a church in the exercise of the minister's
ministry or by a member of a religious order in the exercise of
religious duties required by such order, which duties are not
commercial in nature.
(j) For services { - performed - } { + provided + } by an
independent contractor { + , as defined in ORS 670.600 + }.
(k) To or on behalf of an employee, a beneficiary of an
employee or an alternate payee under or to an eligible deferred
compensation plan that, at the time of the payment, is a plan
described in section 457(b) of the Internal Revenue Code and that
is maintained by an eligible employer described in section
457(e)(1)(A) of the Internal Revenue Code.
(L) When the remuneration is exempt from taxation under this
chapter.
Enrolled Senate Bill 323 (SB 323-ACCA) Page 7
(3) 'Employer' means:
(a) A person who is in such relation to another person that the
person may control the work of that other person and direct the
manner in which it is to be done; or
(b) An officer or employee of a corporation, or a member or
employee of a partnership, who as such officer, employee or
member is under a duty to perform the acts required of employers
by ORS 316.167, 316.182, 316.197, 316.202 and 316.207.
SECTION 8. { + Section 9 of this 2005 Act is added to and made
a part of ORS chapter 657. + }
SECTION 9. { + ' Employment' does not include services
performed by an individual as a stringer, correspondent or
photographer, for print or broadcast media, who submits
information, stories or pictures by the piece or at a flat rate
to newspapers, special publications, television or radio if the
individual is free from direction and control over the means and
manner of providing the services. However, this section does not
apply to services performed for a nonprofit employing unit, as
defined in ORS 657.072, for this state, for a political
subdivision of this state or for an Indian tribe. + }
SECTION 10. { + (1) The amendments to ORS 670.600 by sections
1 and 2 of this 2005 Act and the repeal of ORS 314.013 by section
5 of this 2005 Act apply to income tax years and withholding tax
reporting periods beginning on or after January 1, 2006.
(2) Section 9 of this 2005 Act and the amendments to ORS
657.040 and 670.600 by sections 1, 2 and 4 of this 2005 Act apply
only to services provided on or after the effective date of this
2005 Act. + }
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Passed by Senate April 5, 2005
Repassed by Senate July 5, 2005
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House June 15, 2005
Repassed by House July 6, 2005
...........................................................
Speaker of House
Enrolled Senate Bill 323 (SB 323-ACCA) Page 8
Received by Governor:
......M.,............., 2005
Approved:
......M.,............., 2005
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2005
...........................................................
Secretary of State
Enrolled Senate Bill 323 (SB 323-ACCA) Page 9