Independent Contractor or Employee?

Your employer called you an independent contractor. They issued you a 1099 instead of a W-2. They told you this was standard for your role. Maybe they even had you sign an agreement saying you understood you were not an employee.

None of that matters if the classification is wrong. And in California, it is wrong far more often than employers want to admit.

The ABC Test

California uses a strict three-part test, established in Dynamex Operations West v. Superior Court and codified as AB 5, to determine whether a worker is an employee or an independent contractor. Under this test, a worker is presumed to be an employee unless the hiring entity proves all three of the following:

A. The worker is free from the control and direction of the hiring entity in connection with the performance of 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 as the work performed.

The employer must prove all three. If any prong fails, you are an employee under California law, regardless of what your contract says.

What Misclassification Costs You

If you should have been classified as an employee, you were denied: overtime pay for hours over 8 in a day or 40 in a week, meal and rest break protections, expense reimbursement, workers’ compensation coverage, unemployment insurance, paid sick leave, and employer-side payroll tax contributions. All of this is recoverable, often with penalties and interest going back years.

It Doesn’t Matter What You Signed

An independent contractor agreement does not determine your legal status. The law looks at the actual working relationship, not what the parties wrote on paper. If you were told when and where to work, used the company’s tools, performed work that was central to the company’s business, and didn’t have your own independent operation, you were likely an employee.

If you think you were misclassified, contact Treger Legal for a free evaluation.

This post is for informational purposes only and does not constitute legal advice. Consult with a qualified employment attorney about your specific situation.