Work & Employment · Worker status
Employee or independent contractor?
In this guide
- California presumes a worker is an employee unless the hiring business proves all three parts of the ABC test.
- Some occupations and business relationships are exempt and use an older multi-factor test.
- Classification affects minimum wage, overtime, workers’ compensation, and unemployment insurance.
The ABC test
Under California law (often called AB 5), a person who performs work for pay is presumed to be an employee unless the hiring entity shows all three of these:
- A: the worker is free from the hiring entity’s control and direction in performing the work, in contract and in fact;
- B: the work is outside the usual course of the hiring entity’s business; and
- C: the worker is customarily engaged in an independently established trade, occupation, or business of the same kind.
Exemptions
The law exempts certain occupations and relationships, such as some licensed professionals and business-to-business arrangements that meet specific conditions. For exempt relationships, classification is decided under an older multi-factor test from the Borello case, which looks at control and other factors.
Why it matters
Employees are covered by minimum wage, overtime, break, and expense reimbursement laws, workers’ compensation, unemployment insurance, and paid sick leave. Independent contractors generally are not. Federal tax classification uses a different IRS test.
Getting a determination
The EDD can issue a determination of employment status for state payroll tax purposes. Workers can also raise classification in a wage claim with the Labor Commissioner.
Official sources for this guide
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