Your employer calls you an independent contractor.
You receive a 1099 instead of a W-2. Taxes are not withheld from your paycheck. Maybe you even signed an agreement saying that you are an independent contractor.
But none of those things necessarily makes you one.
Under California law, whether you are an employee or an independent contractor depends on the actual working relationship—not simply the label a company gives you. In many situations, California starts with the presumption that a worker is an employee unless the hiring entity can establish otherwise.
If you are classified as an independent contractor but work more like an employee, you may have been misclassified.
What Is Independent Contractor Misclassification?
Misclassification happens when a business treats someone as an independent contractor when the worker should legally be classified as an employee.
The distinction matters.
Employees may be entitled to protections involving:
- Minimum wage;
- Overtime;
- Meal and rest breaks;
- Reimbursement of certain business expenses;
- Workers’ compensation;
- Unemployment benefits; and
- Other protections provided by California employment law.
A worker who has been misclassified may therefore have been missing more than taxes from a paycheck. Misclassification can affect wages, benefits, workplace protections, and other rights.
The ABC Test
For many California workers, employment status is determined using what is known as the ABC test.
Under that test, a worker is considered an employee unless the hiring entity can establish all three of the following:
- A: You are free from the company’s control and direction.
- B: The work you perform is outside the usual course of the company’s business.
- C: You are independently engaged in the same type of business or trade.
If the ABC test applies, the company needs to satisfy all three parts—not just one or two.
There are exceptions, and some occupations and business relationships are analyzed under a different legal test. But the ABC test provides a useful starting point for understanding why being called a contractor does not necessarily make you one.
How Much Control Does the Company Have Over Your Work?
Ask yourself how independent you actually are.
Does the company:
- Set your work schedule?
- Tell you when and where to work?
- Closely supervise how you perform your job?
- Require you to follow detailed workplace procedures?
- Control important aspects of how you complete assignments?
Some direction from a client does not automatically make an independent contractor an employee. But the more the relationship resembles the control a company ordinarily exercises over its employees, the more relevant that control may become.
Are You Doing the Company’s Regular Business?
This is often an especially useful question.
Suppose a bakery hires a plumber to repair a broken pipe. Plumbing is outside the bakery’s usual business.
Now suppose the bakery regularly hires people it calls independent contractors to decorate the cakes it sells.
That’s different.
California’s Labor and Workforce Development Agency uses essentially this example when explaining the ABC test: regularly decorating the bakery’s cakes is part of the bakery’s usual course of business, while repairing its plumbing is not.
Ask yourself: Am I providing an outside service to this company, or am I doing the work this company exists to provide?
Do You Actually Have an Independent Business?
A true independent contractor is generally operating an independently established business, trade, or occupation of the same nature as the work being performed.
Consider whether you:
- Offer your services to other clients;
- Advertise or market your services independently;
- Maintain your own business;
- Have multiple customers or the ability to seek them out; or
- Otherwise operate independently of the company paying you.
You do not necessarily need every one of those things. But simply having the theoretical ability to start your own business is not the same as actually operating one. California’s guidance specifically notes that an independent business generally must already exist while the work is being performed.
“But I Signed an Independent Contractor Agreement”
That is not necessarily the end of the story.
Neither a contract calling you an independent contractor nor receiving a 1099 instead of a W-2 determines your legal status.
California’s Labor Commissioner expressly states that a company cannot turn an employee into an independent contractor simply by requiring the worker to sign an agreement or paying the worker on a 1099.
What Can Happen if You Were Misclassified?
If you should have been classified as an employee, misclassification may have affected compensation and protections you were entitled to receive.
For example, depending on the circumstances, you may have claims involving:
- Unpaid minimum wages;
- Unpaid overtime;
- Missed meal or rest breaks;
- Unreimbursed business expenses; or
- Other rights or benefits associated with employee status.
The California Labor Commissioner accepts wage claims from workers who believe they have been misclassified, and other options may be available depending on the issue involved.
What Should You Do if You Think You Were Misclassified?
Start by looking beyond the word “contractor.”
Consider who controls your work, whether you perform the company’s regular business, and whether you actually operate an independent business of your own.
Preserve documents you are legally entitled to keep, including your independent contractor agreement, 1099s, payment records, schedules, communications about your work, and records showing the hours you worked and how the company directed your activities.
And remember: your employer’s label does not decide your employment status.
If you believe you were treated as an independent contractor when you were actually an employee, an experienced Los Angeles, CA employment attorney can review the working relationship and help determine whether you may have been misclassified.