California Independent Contractor vs. Employee: How to Tell Which One You Are

Being called an independent contractor does not make you one. In California, one of the strongest worker protection states in the country, the label your employer puts on you has almost no legal weight. What matters is whether the actual working relationship meets the legal definition of independent contractor status. If it does not, you are an employee and entitled to the protections that come with that status, regardless of what your contract says.

Below, employment attorney Ken Seligson from Seligson Law explains how California determines worker classification, what the ABC test requires, and what your rights are if your employer has been calling you a contractor when you are legally an employee.

California Presumes You Are an Employee

Under California Labor Code Section 2775, any person providing labor or services for pay is presumed to be an employee. The company hiring you must prove that you qualify as an independent contractor. You do not have to prove anything. The burden is entirely on them.

The way California determines whether that burden has been met is through a three-part legal standard called the ABC test. If the company cannot satisfy all three parts, you are an employee under California law, full stop.

What Is the ABC Test?

To overcome the presumption that you are an employee, the company hiring you must prove all three of the following conditions are true. This is called the ABC test, and failing even one part means you are legally an employee.

Prong A: You are free from the company’s control

The company must show that you are free from its control and direction in how you perform your work, both under any written contract and in actual practice. This means the company cannot tell you when to work, how to do the job, or require you to follow its internal processes as though you were a regular employee. If the company controls the details of how you do your job, not just the end result, this prong is likely not satisfied.

Prong B: Your work is outside the company’s usual business

This is where most classification disputes land. The company must show that your work is outside the usual course of its business. If you are doing work that is core to what the company does, you are almost certainly an employee under this test. 

A delivery company that hires drivers to make deliveries, for example, fails this prong. A delivery company that hires a plumber to fix a pipe in its office likely passes it. The question is whether your role is central to what the company sells or provides.

Prong C: You are independently established in that trade

The company must show that you are customarily engaged in an independently established trade, occupation, or business of the same nature as the work you are doing for them. 

This means you need to be genuinely running your own business, with other clients, your own advertising or business registration, and your own independent operation. A worker who works exclusively for one company with no independent business presence almost always fails this prong.

What Happens If the Company Cannot Pass ABC Testing

If the company cannot satisfy all three parts of the ABC test, you are legally an employee in California, regardless of what your contract says or what you were told when you were hired. California courts and the Labor Commissioner look at the actual reality of the working relationship instead of the paperwork.

As an employee, you are entitled to:

• Minimum wage and overtime pay
• Meal and rest breaks as required by California’s meal and rest break laws
• Workers’ compensation coverage if you are injured on the job
• Unemployment insurance
• Reimbursement for work-related expenses (under California Labor Code Section 2802)
• Protection from retaliation if you raise a complaint
• Reimbursement for phone and internet use if required for your work 

If you have been misclassified, you may be owed back pay for unpaid overtime, missed meal and rest break premiums, unreimbursed expenses, and other compensation you should have received as an employee. Here is more on how to sue your employer for unpaid wages in California, along with some considerations before you go that route.

Are There Exceptions to the ABC Test?

Yes. California Labor Code Sections 2776 through 2784 carve out specific occupations that are exempt from the ABC test. For exempt occupations, the older Borello test applies instead, which looks at a broader set of factors focused primarily on how much control the hiring company has over the work.

Occupations that may be exempt from the ABC test and subject to the Borello test instead include certain licensed professionals such as doctors, lawyers, and licensed accountants, certain insurance agents and brokers, certain real estate licensees, some workers in the music and entertainment industries, and others listed specifically in the statute.

Being exempt from the ABC test does not automatically make you an independent contractor. It simply means a different legal standard applies to determine your classification.

One important carve-out worth noting is app-based drivers. Following the passage of Proposition 22 in 2020, drivers working through platforms like Uber and Lyft are governed by a separate framework that does not apply the ABC test. This remains an actively litigated area of California law.

The Real Consequences of Misclassification

Misclassification is not a paperwork problem. It is a wage and hour issue with real financial consequences.

When a company misclassifies an employee as a contractor, the worker typically loses access to overtime pay, meal and rest breaks, expense reimbursements, and other legal protections. The company avoids paying payroll taxes, providing workers’ compensation insurance, and complying with a range of employment laws. In California, those savings come directly at the worker’s expense. This includes your right to timely final pay if the working relationship ends. 

If you have been working as a contractor but believe you should have been classified as an employee, you may have a legal claim for the compensation you were denied. California law allows workers to recover back wages, penalties, and, in some cases, attorney fees.

Talk to a California Employment Lawyer at Seligson Law

If your employer calls you a contractor but controls when, how, and where you work, that label may not hold up under California law. Many misclassified workers are owed months or years of back pay, overtime, and benefits they never received.

Employers who are unsure whether their current classification practices comply with California law can speak with Seligson Law’s employer counseling team before a claim is filed. 

Call Seligson Law at 213-293-6692 or send us a message to discuss your situation.

Frequently Asked Questions About Independent Contractors vs. Employees in California

1. How does California decide if I am an employee or an independent contractor? 

California uses the ABC test under Labor Code Section 2775 to classify workers. Every worker is presumed to be an employee unless the company can prove all three prongs of the test: that you are free from their control, that your work is outside their usual business, and that you operate an independently established business. Failing any one prong means you are legally an employee.

2. Does it matter if I signed a contract saying I am an independent contractor? 

No. In California, courts and the Labor Commissioner look at the actual reality of the working relationship, not the label in your contract. If the working relationship fails the ABC test, you are likely an employee regardless of what your written agreement says.

3. What rights do I have if I was misclassified as an independent contractor? 

If you were misclassified, you may be entitled to unpaid overtime, meal and rest break premiums, expense reimbursements, and other compensation you should have received as an employee. Seligson Law can help you assess your claim.

4. Are there any exceptions to the ABC test in California? 

Yes. Certain licensed professions and specific industries are exempt from the ABC test under Labor Code Sections 2776 through 2784. For those workers, the older Borello test applies instead. Being exempt from the ABC test does not automatically make you a contractor. It simply means a different standard is used to evaluate your classification.

5. What is the Borello test? 

The Borello test is an older, multi-factor standard that California still uses for workers who are exempt from the ABC test. It focuses primarily on how much control the hiring company has over the work, along with other factors such as whether the work is part of the hiring entity’s regular business and whether the worker has invested in their own equipment or tools.

6. Does the ABC test apply to app-based drivers in California? 

Not in the same way. Following Proposition 22, app-based drivers working through platforms like Uber and Lyft are governed by a separate framework that does not apply the standard ABC test. This remains an actively litigated area of California employment law.

7. How do I know if my employer is misclassifying me? 

Ask yourself: does the company control how you do your work, not just what you deliver? Is the work you do core to what the company sells or provides? Do you work exclusively for this company with no independent business of your own? If the answer to any of these is yes, you may be legally an employee. Contact Seligson Law to discuss your specific situation.