How Independent Contractors Become Employees Under California Law

California’s AB 5 created one of the strictest worker classification tests in the country. Under the ABC test, a worker is presumed to be an employee unless the hiring entity proves all three prongs. Many workers classified as contractors are actually employees owed full wage protections.

The ABC Test

To classify a worker as an independent contractor in California, the hiring entity must show: (A) the worker is free from the control and direction of the hiring entity; (B) the worker performs work 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.

Prong B eliminates most gig worker misclassification arguments. A delivery driver classified as a contractor by a delivery company fails Prong B because delivery is the core of the company’s business. An employer who relies on misclassified contractors for their primary service has a significant exposure across every worker so classified.

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