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A 1099-MISC is the required federal form to report compensation paid to a person not considered an employee for services rendered where the compensation is more than $600 in a calendar year. Its purpose is to inform the IRS of income received by individuals and partnerships in business for themselves.
The 1099-MISC indicates that the individual or partnership was treated as a nonemployee. It does not indicate the determination of any government agency that the person performing services is actually an independent contractor under the law. An employee receives a federal form W-2.
The IRS frequently asked questions on this subject indicate that if an individual thinks he or she was or is an employee and wants the IRS to issue a determination, he or she may submit Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
The method of payment is not the single determining factor. An independent contractor must be free from direction and control over the means and manner of accomplishing the work, regardless of the form of payment. Although a bid and contract can be based on the number of hours worked, an independent contractor's pay will relate more to the completion of the job, service, or project.
Regardless of what they call themselves, workers must meet the requirements of an independent contractor under the law.
It is allowed only if the employee meets the requirements of being an independent contractor under the law. If the nature of the employment stays the same, the employee is still an employee. If becoming an independent contractor is a condition of continued employment, the employee has in effect been terminated as an employee and may be eligible for unemployment benefits.
A signed contract does not establish that a person performing services is an independent contractor. A contract is an agreement between parties. It does not have to be in writing. If there are no control issues written into the contract, the individual may still be an employee as determined by the actual control or direction. The facts of the situation establish the reality of the relationship.
For workers’ compensation purposes, the employment relationship determines the worker/independent contractor status based on who has the right to direct and control the worker. A state boundary in itself does not establish independence.
For information of where workers are reported for unemployment insurance see Employment Department informational flyer #9, Multi-state employment.
No. A professional or trade license represents the legal right to perform services in a specific trade or profession. It does not guarantee that the person is an independent contractor. If there is direct evidence of direction and control, or the right to direct and control the services performed, then it does not matter if the individual has a professional license. There are exemptions under some laws for licensed professionals; these must be addressed with each agency enforcing that law.
Not in Oregon. There is also no assurance that all agencies enforcing the laws within Oregon can establish the determination of independence with the same result. Within workers' compensation law, however, if an individual is licensed with the Construction or Landscape Contractors boards, there is a conclusive presumption of independence when the licensed independent contractor is involved in activities subject to and working under that license.
An independent contractor cannot be treated as an employee. If an employer maintains control, then the individual is an employee. An independent contractor is free from direction and control. An employer may specify the expected results, but the manner and method of obtaining those results is not in the employer’s control if the person doing the work is an independent contractor.
Workers’ Compensation Division
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Small Business Ombudsman for Workers’ Compensation
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