Which of the following best describes Oregon's workers compensation requirements for contractors?
Correct Answer
A) Required for all contractors except sole proprietors with no employees
Oregon requires workers compensation coverage for all employers, including contractors, except sole proprietors with no employees.
Why This Is the Correct Answer
Oregon law (ORS Chapter 656) mandates workers' compensation coverage for all employers with one or more employees. The single statutory exemption relevant to contractors is sole proprietors who have NO employees — they are not required to cover themselves (though they may elect coverage). Any contractor who hires even one worker must carry coverage.
Why the Other Options Are Wrong
Option B: Optional but recommended for liability protection
Workers' compensation in Oregon is NOT optional. It is a mandatory legal requirement under ORS 656. Describing it as 'optional but recommended' is flatly incorrect and, if believed, could expose a contractor to criminal penalties and civil liability for uninsured workplace injuries.
Option C: Required only for commercial construction projects
Oregon's workers' compensation requirement is not limited to commercial projects. It applies to ALL work — residential and commercial alike — based on the employer-employee relationship, not the type of construction project.
Option D: Required only for contractors with more than 5 employees
There is no 5-employee threshold in Oregon workers' compensation law. Coverage is required from the very first employee. The '5 employees' trigger appears in other employment laws (e.g., certain federal anti-discrimination statutes) but not in Oregon workers' comp.
Memory Technique
Oregon workers' comp rule: '1 employee = 1 obligation.' The moment you hire anyone, you are legally required to carry coverage. Only a true sole proprietor — working completely alone — is exempt.
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