Misclassified as an Independent Contractor? California's ABC Test

The three parts of the ABC test

Labor Code §2775, which codified the California Supreme Court's 2018 Dynamex decision, presumes that a person providing labor or services for pay is an employee. The hiring entity can treat the worker as an independent contractor only if it shows all three of these conditions:

If even one part fails, the worker is generally an employee for purposes of the Labor Code, the wage orders and the Unemployment Insurance Code. Part B often decides cases: a delivery company that hires drivers to deliver its packages, for example, has difficulty showing that delivery is outside its usual business.

• A: the worker is free from the hiring entity's control and direction in performing the work, both under the contract and in fact.
• B: the worker performs work that is outside the usual course of the hiring entity's business.
• C: the worker is customarily engaged in an independently established trade, occupation or business of the same nature.

Exceptions and the Borello test

Labor Code §§2776 to 2784 list many exceptions, for example for certain licensed professionals, business-to-business relationships, referral agencies and some creative and marketing work. When an exception applies, the older multi-factor test from the 1989 Borello decision generally decides employment status instead. Under Borello, the most important question is whether the business has the right to control the manner and means of the work, together with factors such as who supplies tools, how the worker is paid and whether the work is part of the regular business.

App-based rideshare and delivery drivers are governed by separate rules under Proposition 22, which the California Supreme Court upheld in 2024. Whether a specific exception fits your work often depends on detailed conditions, so it is worth having the facts checked.

What a misclassified worker may be owed

Employees are entitled to minimum wage, daily and weekly overtime, meal and rest breaks or premiums, paid sick leave, itemized wage statements and reimbursement of necessary business expenses such as mileage and phone use under Labor Code §2802. They are covered by workers' compensation and unemployment insurance, and the employer must pay its share of payroll taxes.

Labor Code §226.8 also provides civil penalties against an employer that willfully misclassifies workers. Claims may be brought before the Labor Commissioner, in court or, in some cases, under the Private Attorneys General Act.

What to gather

Keep your contract, invoices, 1099 forms and payment records, and write down who set your schedule, who supervised you, what tools and equipment you used and whether you worked for anyone else. Note the hours you worked and the expenses you paid yourself. If you were told you were a contractor when you started, keep the job ad or offer.

Limitation periods for wage claims run from when the wages were due, so older claims can be lost. An employment attorney can assess whether the ABC test or an exception applies and what the best route is.