Oregon Independent Contractor Classification Law Reminds Us What is Important

By: Mark Zisholtz
Edited by: Brandon Pavley

This commentary is in reference to content found on the State of Oregon’s website. Please visit their site for more information.

It is not uncommon to hear procurement or HR personnel claim their independent contractors are compliant because they are a business entity and signed documentation indicating they are an independent contractor. However, nothing could be further from the truth. Take, for example, the State of Oregon, which explicitly states that “[t]he 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.”

Further, currently sitting in a congressional committee in the U.S. House of Representatives is the Payroll Fraud Prevention Act of 2015 which defines “non-employees” as those who provide services through a corporation or LLC if they are required to create or maintain such entities as a “condition for the provision of such labor or services.” In other words, if the Payroll Fraud Prevention Act ever were to become law in its current form, then an independent contractor would automatically, by operation of law, be deemed misclassified if you required that contractor to form an entity as a condition of providing services!

Moral of the story: look to the substance of the relationship, not the form.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s