Oregon Appeals Court Looks at Standard for Independent Contractors

Most employers are aware that there are three different statutory tests for determining if an individual is an employee or an independent contractor. One of the elements of the test applied by the Oregon Department of Revenue and Employment Department, among other agencies, is whether the individual 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.” ORS 670.600(2)(a).

Numerous cases focus on whether oversight of services performed constitutes control over the means and manner of performance, thus indicating an employment relationship. A recent Oregon Court of Appeals case found that setting the rate of pay and determining which job assignments are available to be performed are “not indicative of control” over an individual’s performance of tasks. Instead, “they are aimed at achieving a desired result–a completed assignment at the required time and at a fixed price.” The Court also found that inspection of work performed and requiring correction of defective work before payment, was “directed at ensuring that the desired results have been achieved” and not evidence of direction and control over how the services were performed because, pursuant to Oregon law, the “correction of defective work is a factor indicative of being customarily engaged in an independent business.”

Finally, the Court found that setting non-negotiable rates of pay for cleaning jobs and providing a list of available jobs and a schedule showing when jobs had to be completed was also directed at ensuring desired results – clean houses as of a particular date – and not evidence of direction and control over how the houses were cleaned. Ponderosa Properties, LLC v. Employment Dept., http://www.publications.ojd.state.or.us/docs/A150764.pdf

While the Court’s decision sheds light on the difference between controlling the means and manner of providing services vs. specifying desired results, the question of when an individual is properly classified as an independent contractor always requires a fact based analysis.

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