Compressed Pattern, LLC v. Employment Dept. Tax Section

Under ORS 670.600(3), a person has an independently established business when his work location is both maintained and separate from the person for whom he is providing services.

Compressed Pattern (Employer) sought review of an ALJ decision that determined Employer should have paid employment taxes on payments made to Singer. Employer hired Singer for part of 2009, but did not pay employment taxes on the wages paid to him. In March, 2010, the Employment Department Tax Section (Employment Dept.) sent Employer a notice that he had not paid taxes on those wages to Singer. Employer appealed to an ALJ, where he argued that Singer was an independent contractor. Employer had to meet 3 of the 5 requirements set out in ORS 670.600(3). The ALJ determined that Employer did not meet the burden of showing that Singer was engaged in an "independently established business" and was therefore not an independent contractor, so he must pay the taxes. On review, Employer contended that the ALJ misinterpreted the statute. The Court of Appeals held that there was substantial evidence to determine that Singer did not have a separate business location, bear any risk of loss, or made a significant investment in the business. Thus the ALJ correctly determined that Singer was not an independent contractor under ORS 670.600(3) and Employer must pay taxes on the wages paid to Singer. Affirmed.