Employee or Independent Contractor?

Were Oregon workers independent contractors or employees?

Chambermaids

From HR.BLR.com — The Oregon Appeals court said:

that freedom from direction and control over the means of providing services signifies that a worker can determine which resources to use to perform the work and how to use those resources. Freedom from direction and control over the manner of providing services means a worker can determine the method by which the services are performed.

The court noted that some oversight may exist in an independent contractor relationship. The question is, does the oversight relate to achieving the desired results, or does it relate to the manner and means of performing the services?

Mayea and Livsey provided their own tools and equipment, exercised discretion in the timing of performing the work, and could hire assistants. Also, Ponderosa had no direction or control over the manner in which they performed the work. The court rejected the ALJ’s finding that setting the rate of pay, determining which job assignments were available, inspecting the work, and requiring corrections to be made before payment indicated direction and control over the manner and means of performing the work. Ponderosa aimed to ensure that the desired results were achieved, not determine how the results were achieved.

The court also rejected the ALJ’s finding that Ponderosa maintained significant direction and control over the housecleaners by setting nonnegotiable rates of pay, providing a monthly list of rental units that needed to be cleaned, and offering certain cleaning jobs to specific housecleaners. The housecleaners’ work schedules did not indicate control because they usually had four to six days to complete their work. Even on rush jobs, they had six to eight hours to finish the work. Their work schedules were determined by the units’ rental schedules, not Ponderosa’s desire to direct and control how they performed the services.

The court rejected the housecleaners’ argument that nonnegotiable pay rates and a prepared list of cleaning jobs indicated direction and control over the means and manner of providing the services. Instead, those items showed the results Ponderosa sought when it hired a housecleaner. Ponderosa sought to ensure that rental units were clean when tenants arrived at a predictable and reasonable price.

The court also reviewed the ALJ’s finding on whether the housecleaners and maintenance workers were involved in independently established businesses. An independently established business is defined as an operation that meets three of the five criteria in ORS 670.600. For an independently established business to exist, a person must:

  • Maintain a business location;
  • Bear a risk of loss related to the business or providing services;
  • Provide contract services for two or more entities during a 12- month period or routinely engage in advertising or solicitation to provide services;
  • Make a significant investment in the business; and
  • Have the authority to hire and fire other people.

The court reviewed the ALJ’s finding that some workers did not contract to work for two or more entities or bear a risk of loss. The ALJ held that the fact that the housecleaners had a fixed pay rate demonstrated that they bore a significant risk of loss. The time and work involved in cleaning each unit depended on the unit’s condition, and housecleaners were not given additional compensation if a job took more time or work. Similarly, Mayea and Livsey also risked spending more time on their work. The court noted that the workers’ risk was established by the fact that they were required to fix defective work without additional payment.

On the issue of working for multiple clients, there was evidence that the workers provided services to other clients for an hourly wage without a written contract. According to the ALJ, that fact did not establish that the individuals worked for the clients as independent contractors. The court disagreed, finding there was no evidence that the housecleaners or maintenance workers worked for independent homeowners under a different arrangement.

The court did not require Ponderosa to prove that the housecleaners and maintenance workers worked as independent contractors for homeowners or another management agency. There was sufficient evidence to show that the workers provided contract services “for two or more different persons.” 

Read the full story at Were Oregon workers independent contractors or employees?.

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