You need to get your advice from an accountant or a payroll service on this matter... preferably the accountant.

I am not saying that the employer's advice is not sound, I can just tell you that some people tend to exagerate. We all hate payroll taxes, and sometimes it is just natural to exagerate.

I have heard about Oregon (don't you folks have some type of universal heath care up there... that alone could cost quite a bit.)

At any rate... follow that up and see.