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Unless she had a written agreement that specified that the she was employed for personal services for a specified period of time then she has no legitimate claim. Oregon is an "Employment at Will" state. Meaning that an employee (or independent contractor) may be fire for any reason or no reason. See: Simpson v. Western Graphics, 293 Or 96, 99, 643 P2d 1276 (1982); Nees v. Hocks, 272 Or 210, 216, 536 P2d 512 (1975), holding that , in the absence of a contract or statute to the contrary, Oregon employers may discharge an employee at any time and for any reason, or for no reason at all.
This threatened suit is what attorneys refer to as a Nuisance Suit. They are betting that you will be willing to settle for a lesser amount rather than go through the trouble of defending.
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