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Oregon Independent Contractor Agreement Template

One Oregon statute defines independent contractor for five separate chapters at once, and the wage and hour chapter is deliberately not one of them.

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Introduction

An Independent Contractor Agreement is a contract between a business and a self-employed worker covering scope, payment, ownership of the work product, and how the engagement ends. Classification is decided by a legal test rather than by the title on the document, and most states leave that test scattered across separate acts that do not agree with one another. Oregon did the opposite and then stopped one chapter short. ORS 670.600(2) opens with the words As used in ORS chapters 316, 656, 657, 671 and 701, and then supplies a single definition of independent contractor that binds the Department of Revenue, the Employment Department, the Workers' Compensation Division, the Landscape Contractors Board, and the Construction Contractors Board at the same time. That is the strongest anti-divergence structure in the country. But ORS chapter 653, the wage and hour chapter, is not on that list, and the Bureau of Labor and Industries confirms the point against its own interest, stating that it applies the economic realities test used by courts under the federal Fair Labor Standards Act. So Oregon is uniform across five chapters and genuinely divergent at exactly one boundary.

Key Things to Know

  1. 1

    One statute supplies the definition for five chapters at once. ORS 670.600(2) begins As used in ORS chapters 316, 656, 657, 671 and 701, covering state income tax withholding, workers' compensation, unemployment insurance, landscape contracting, and construction contracting. A single analysis therefore answers the question for the Department of Revenue, the Employment Department, the Workers' Compensation Division, the Landscape Contractors Board, and the Construction Contractors Board.

  2. 2

    The structure is two substantive prongs plus two licensing elements, and there is no prong about whether the work falls outside the usual course of the hiring business. Under ORS 670.600(2) an independent contractor is a person who provides services for remuneration and who 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; is customarily engaged in an independently established business; is licensed under ORS chapter 671 or 701 if a license is required for the services; and is responsible for obtaining other necessary licenses or certificates. All four elements must be met.

  3. 3

    The independently established business element has its own sub-test. ORS 670.600(3) requires any three of five showings: that the person maintains a business location separate from the business of the person for whom services are provided; that the person bears the risk of loss; that the person provides contracted services for two or more different persons within a twelve month period or routinely engages in business advertising, solicitation, or other marketing; that the person makes a significant investment in the business; and that the person has the authority to hire and to fire other persons to provide or assist in providing the services.

  4. 4

    Wage and hour is the exception, and the state labor agency says so itself. ORS chapter 653 is absent from the list in ORS 670.600(2). The Bureau of Labor and Industries states that when evaluating whether a person has performed work as an employee or an independent contractor it applies the economic realities test used by courts to determine employee status under the federal Fair Labor Standards Act, and that ORS 670.600 defines independent contractor for other agencies. ORS 653.010(2) supplies the broad wage definition, under which employ includes to suffer or permit to work.

  5. 5

    So a minimum wage or overtime claim runs on a standard that no other Oregon agency uses. A worker who satisfies all four elements of ORS 670.600 and three of the five business showings can still be an employee for wage and hour purposes if the economic realities analysis says the worker is economically dependent on the business rather than in business for themselves. That single boundary is where Oregon divergence actually lives.

  6. 6

    Forming a company does not settle it, and neither does the label. ORS 670.600(5)(a) provides that 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. The Bureau of Labor and Industries makes the parallel point for wage purposes, stating that an agreement labeling a worker an independent contractor is not determinative.

  7. 7

    Workers' compensation adds nothing of its own, and offers an opt-in. ORS 656.002(29) says only that independent contractor has the meaning given that term in ORS 670.600, so the Workers' Compensation Division applies the identical four elements and three of five showing. ORS 656.128(1) then lets an independent contractor pursuant to ORS 670.600 make written application to an insurer to elect coverage as a subject worker, which is an option rather than a requirement.

Key decisions before you file

Before you file a Independent Contractor Agreement in Oregon, a few decisions shape the document: which option to choose and what each one means. The Independent Contractor Agreement guide walks through them.

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Oregon Independent Contractor Agreement (Compact State Terms)

The clauses below are the Oregon additions only. Use them with the national Independent Contractor Agreement, which supplies the parties, scope, fees, term, ownership of work product, confidentiality, taxes, indemnification, and general provisions. These terms cover only what Oregon law treats differently.

1. Governing Law and the Reach of ORS 670.600

This Agreement is governed by the laws of the State of Oregon. ORS 670.600(2) supplies one definition of independent contractor for ORS chapters 316, 656, 657, 671 and 701, and ORS chapter 653, governing minimum wage and overtime, is not among them. Satisfying ORS 670.600 therefore addresses income tax withholding, workers' compensation, unemployment insurance, and the licensing boards, but does not answer a wage and hour question.

2. The Four Elements of ORS 670.600(2)

Contractor is free from direction and control over the means and manner of providing the services, subject only to Company's right to specify the desired results; is customarily engaged in an independently established business as described below; is licensed under ORS chapter 671 or 701 where the services require it; and is responsible for any other licenses or certificates necessary to provide the services. Contractor shall give Company any required license number before beginning work and maintain it for the term. Because licensure sits inside the definition, a lapse is a defect in the classification, not merely a contract breach.

3. Independently Established Business

At least three of the following are true and will remain true during the term, tracking ORS 670.600(3): Contractor maintains a business location separate from Company's; Contractor bears the risk of loss, which may be shown by fixed-price contracts, an obligation to correct defective work, a warranty, or liability or indemnification insurance; Contractor provides contracted services for two or more different persons within a twelve month period or routinely engages in business advertising, solicitation, or other marketing; Contractor makes a significant investment in the business; and Contractor has the authority to hire and to fire other persons to provide or assist in providing the services.

4. Wage and Hour Is Decided on a Different Standard

Minimum wage and overtime claims under ORS chapter 653 are not decided under ORS 670.600. ORS 653.010(2) defines employ to include to suffer or permit to work, and the Bureau of Labor and Industries applies the economic realities test used by courts under the federal Fair Labor Standards Act, asking whether the worker is in business for themselves or economically dependent on the hiring business.

5. Entity, Labels, and Elective Coverage

Under ORS 670.600(5)(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 independent contractor status, and an agreement labeling a worker an independent contractor is not determinative. Contractor is responsible for Contractor's own workers' compensation arrangements; ORS 656.128(1) permits an independent contractor pursuant to ORS 670.600 to apply in writing to an insurer to elect coverage as a subject worker, an option rather than an obligation.

This Oregon edition is general information, not legal advice; attorney review is available.

Oregon Requirements for Independent Contractor Agreement

Oregon Single Definition Binding Five Chapters (ORS 670.600(2))

The definition opens with the words As used in ORS chapters 316, 656, 657, 671 and 701, covering state income tax withholding, workers' compensation, unemployment insurance, and the two contracting licensure chapters. One analysis under this section therefore governs the Department of Revenue, the Employment Department, the Workers' Compensation Division, the Landscape Contractors Board, and the Construction Contractors Board. Chapter 653 is not included.

Oregon Freedom From Direction and Control Element (ORS 670.600(2)(a))

The person must be 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. Draft the scope and supervision terms so the hiring party specifies deliverables, specifications, and deadlines while leaving methods, sequence, tools, and hours to the contractor, and make sure the practice matches the drafting.

Oregon Independently Established Business, Three of Five (ORS 670.600(3))

Being customarily engaged in an independently established business requires any three of five showings: a separate business location; bearing the risk of loss; providing contracted services for two or more different persons within a twelve month period or routinely engaging in business advertising, solicitation, or other marketing; a significant investment in the business; and the authority to hire and fire other persons to provide or assist in providing the services. Identify in the engagement record which three the contractor relies on.

Oregon Licensure Elements (ORS 670.600(2)(c) and (2)(d))

The person must be licensed under ORS chapter 671 or ORS chapter 701 where the services require such a license, and must be responsible for obtaining other licenses or certificates necessary to provide the services. Because licensure is part of the definition rather than a separate compliance obligation, a lapse during the term is a defect in the classification itself. Record the license number and require notice of any lapse.

Oregon Wage and Hour Chapter Is Outside ORS 670.600 (ORS 653.010(2))

ORS chapter 653 is absent from the list of chapters in ORS 670.600(2), and its definition of employ includes to suffer or permit to work. The Bureau of Labor and Industries applies the economic realities test used by courts under the federal Fair Labor Standards Act to decide whether a worker is an employee or an independent contractor for wage and hour purposes. A favorable result under ORS 670.600 does not resolve a minimum wage or overtime claim.

Oregon Unemployment Insurance Incorporates the Definition (ORS 657.040(1))

Services performed by an individual for remuneration are deemed to be employment subject to the chapter unless and until it is shown to the satisfaction of the Director of the Employment Department that the individual is an independent contractor, as that term is defined in ORS 670.600. The default is employment and the hiring party carries the showing, which is why the three of five business record matters as much as the contract language.

Oregon Workers' Compensation Incorporates the Same Definition (ORS 656.002(29))

The workers' compensation chapter states only that independent contractor has the meaning given that term in ORS 670.600. There is no separate workers' compensation factor test, so the Workers' Compensation Division applies the identical four elements and the same three of five showing that the Employment Department applies.

Oregon Business Entity Does Not Establish Status (ORS 670.600(5)(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. Requiring a worker to incorporate as a condition of engagement therefore adds no protection on its own and should not be treated as a substitute for the substantive elements.

Oregon Elective Coverage for Independent Contractors (ORS 656.128(1))

An independent contractor pursuant to ORS 670.600 may make written application to an insurer to elect coverage as a subject worker. This is an opt-in available to the contractor rather than an obligation imposed by the hiring business, so an agreement should allocate responsibility for the contractor's own coverage without purporting to require or to provide it.

Oregon Fixed-Price Contracts as Risk of Loss Evidence (ORS 670.600(3)(b)(A))

Entering into fixed-price contracts is listed as one way of showing that the person bears the risk of loss, alongside being required to correct defective work, warranting the services, and carrying liability or indemnification insurance. This is the one place where the form of the contract carries weight in the Oregon analysis, so a fixed fee or milestone structure is preferable to hourly billing where the classification matters.

Frequently Asked Questions

Oregon consolidated where most states fragmented. ORS 670.600(2) supplies a single definition of independent contractor for ORS chapters 316, 656, 657, 671 and 701, so the Department of Revenue, the Employment Department, the Workers' Compensation Division, the Landscape Contractors Board, and the Construction Contractors Board all apply the same test. One analysis answers five questions, which is unusual. The catch is the one chapter left off the list.

No, and describing it that way misstates the structure. ORS 670.600(2) has an element about freedom from direction and control and an element about being customarily engaged in an independently established business, plus two licensing elements. There is no element asking whether the service is performed outside the usual course of the hiring entity's business, which is the middle prong of a true ABC test. Reading in a prong the statute does not contain leads to the wrong drafting.

An independent contractor is a person who provides services for remuneration and who 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; is customarily engaged in an independently established business; is licensed under ORS chapter 671 or 701 if the services require such a license; and is responsible for obtaining other licenses or certificates necessary to provide the services. All four must be satisfied.

By any three of the five showings in ORS 670.600(3): a business location separate from the location of the person for whom services are provided; bearing the risk of loss, which can be shown through fixed-price contracts, an obligation to correct defective work, a warranty, or liability insurance; providing contracted services for two or more different persons within a twelve month period or routinely engaging in advertising, solicitation, or other marketing; a significant investment in the business; and the authority to hire and fire other persons to provide or assist in providing the services.

No. ORS chapter 653 is not among the chapters listed in ORS 670.600(2). The Bureau of Labor and Industries states that it applies the economic realities test used by courts to determine employee status under the federal Fair Labor Standards Act, and that ORS 670.600 defines independent contractor for other agencies. So the wage analysis asks whether the worker is in business for themselves or is economically dependent on the hiring business.

Yes, and this is the boundary worth planning around. Satisfying the four elements and three of the five business showings settles unemployment insurance, workers' compensation, income tax withholding, and the licensing boards. It does not settle a minimum wage or overtime claim, which is decided under a different standard entirely. Where the wage exposure on an engagement is significant, attorney review is an option.

No. ORS 670.600(5)(a) provides that 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. The entity may support the independently established business element as part of a larger showing, but standing alone it does nothing.

No. ORS 670.600 requires no written contract, no prescribed terms, and no disclosure wording, and no element of the test turns on how the parties label the relationship. The statute points the other way in ORS 670.600(5)(a). The one place a contract term does work is evidentiary: entering into fixed-price contracts is listed in ORS 670.600(3)(b)(A) as a way of showing that the person bears the risk of loss.

Not automatically, and not by requirement of this kind of agreement. ORS 656.002(29) gives independent contractor the meaning it has in ORS 670.600, so a person who satisfies that definition is outside subject worker coverage for their own account. ORS 656.128(1) then allows an independent contractor pursuant to ORS 670.600 to make written application to an insurer to elect coverage as a subject worker, which is an opt-in.