Employee Compensation: Labor Cost Subtraction

# (1)

(1) Definitions. For purposes of the labor cost subtraction, as calculated under OAR 150-317-1200:

(a) "Employee" has the meaning given that term in OAR 150-316-0255(5). "Employee" does not include:

(A) Partners in a partnership who receive guaranteed payments or distributive income;

(B) Members in a Limited Liability Company (LLC) who receive guaranteed payments or distributive income;

(C) Statutory employees described in the Internal Revenue Code (IRC) section 3121(d)(3); or

(D) Independent contractors, as defined in ORS 670.600.

(b) "Compensation" has the meaning given that term in ORS 317A.100(1)(b)(H).

# (2)

(2) The labor cost subtraction, as calculated under OAR 150-317-1200, does not include:

(a) Compensation in excess of $500,000 paid to any single employee;

(b) Payroll taxes, including but not limited to, Social Security, Medicare, and Federal unemployment.