California Independent Contractor Laws Broken Down

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 2,224 reviews

Jump to Section

Need help with a legal contract?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

Californian Independent Contractors

Independent contractors are different from traditional employees which has lead to California independent contractor laws. They engage in business activities as an independent entity and include roles such as graphic designers, freelance writers, construction workers, consultants, and more. Individuals classified as independent contractors are not employees of the hiring company.

While there are several benefits of working as an independent contractor, you are also responsible for paying your benefits, withholding Social Security taxes, and providing supplies to complete the projects you are hired to manage. Since the financial burden falls on the independent contractor, it is too easy for unlawful companies to abuse the legal system.

As such, it is vital to understand California independent contractor laws and how they may apply to your specific situation. If you need personalized legal advice, ensure that you speak with a labor lawyer for more information.

What is an Independent Contractor in California?

California’s contractor laws state that an independent contractor is a person or business who provides a specific service to another company in exchange for compensation. It further says that the independent contractor is under managerial control for results and not how he or she accomplishes the work.

In other words, independent contractors in California have flexibility and control over how they work, including time and location, without feedback from management. The company you serve can only exert control over the results you are producing.

Independent Contractor vs. Employee in California

Several distinctions exist between an independent contractor vs. employee . Independent contractors and employees may perform similar tasks, but their relationships with the company are very different.

DIFFERENCE #1: Free From Managerial Control

The primary difference is that an independent contractor has a right to act as his or her own boss rather than the employer dictating how, where, and when they perform their service.

Employees receive benefits, tax withholdings, and employee protections, including workers’ compensation, whereas independent contractors are responsible for these elements.

DIFFERENCE #2: Follow All Applicable Rules

While every state has its set of unique guidelines that determine an employee’s status, California’s passage of Assembly Bill 5 has specific tests that employers must perform when it comes to employee classification. AB is primarily influenced by a landslide court decision and seeks to protect workers from unsavory organizations from taking advantage of independent contractor statuses.

What is AB 5?

California Assembly Bill 5, or AB 5, is a legislative act passed by Governor Newsom in September 2019. The new law was effective on January 1, 2020. AB 5 requires companies to reclassify independent contractors as employees with a few exceptions to the rule.

The bill was designed to increase regulation over companies that hire gig workers in large numbers, including DoorDash, Shipt, Postmates, Uber, and Lyft. Companies must utilize a three-pronged test to show whether the workers should be classified as independent contractors or employees.

Get Free Bids to Compare

Leverage our network of lawyers, request free bids, and find the right lawyer for the job.

Get Bids Now

California Independent Contractor Test

After a landmark decision, several new pieces of California legislation went into effect in January 2020. These new laws significantly impact businesses, employees, and independent contractors alike. The vast majority of rules under AB 5 and other assembly bills were designed to protect independent contractors from misclassification.

The Dynamex Decision

In 2018, the California Supreme issued a critical decision regarding the matter of Dynamex Operators West v. Superior Court of Los Angeles. The supreme court rejected a test determining whether to classify a worker as an independent contractor vs. employee known as the Borello test. Instead of the Borello test, an employee-friendly standard was adopted while ultimately upending the independent contractor market.

The most significant turn was how the supreme court incorporated a new standard that presumes all California workers are employees unless their employment meets specific criteria. The specific criteria are included in the newly accepted ABC test as a result of the Dynamex decision.

The ABC Test for Independent Contractors in California

Laws around independent contractor vs. employee relationships have mainly been ambiguous up until the Dynamex decision. While California gained the most attention over the ABC test, other states, including New Jersey and Massachusetts , have already adopted some form of it. Keep in mind that the ABC test assumes that a worker is an employee unless the test shows otherwise.

An individual is an independent contractor in California only if they meet all three (3) requirements of the test:

  1. The worker remains free from managerial direction and control related to the worker’s performance
  2. The worker performs duties outside the scope of the company’s course of business
  3. The worker primarily engages as an established business and performs the same work as for the company

Simply put, as long as you can offer your services to other businesses, have an established entity, and provide a unique skill set, you are likely an independent contractor. Ensure that you function as one. Speak with an employment attorney to help you determine if the ABC test applies to your situation and what you can do to create a substantial independent contractor agreement that you can present to the hiring company.

Fair Employment and Housing Act

AB 51 prevents companies and employers from requiring employees and job applicants to agree to arbitration for violations involving the Fair Employment and Housing Act (FEHA) . It also prevents employers from engaging in retaliatory behavior against employees who refuse to enter into an arbitration agreement as a term or condition of employment.

In addition to opening up, other civil remedies for FEHA claims, the statute also provides for reasonable attorneys’ fees reimbursement and injunctive relief. Employers violating of these employment laws can be criminally charged. These provisions also include those involving misclassified workers under California labor laws.

What To Do If You’ve Been Misclassified

If you believe that the company you are working for is misclassifying your employment, you have rights protected by state and federal laws. Your employer may be taking advantage of your relationship in favor of lower costs and higher profits. You may be owed lost work wages, overtime, benefits, and reimbursements. These financial losses will depend upon an evaluation of your case to establish the types of employment in which you are engaging.

Contractscounsel California Independent Contractors

Image via Pexels by Roberto Nickson

Here are steps you can take if your employer has misclassified you:

STEP 1: Preserve any and all communications between you and the company

STEP 2: Review the types of employment contracts in place for clarity regarding your relationships

STEP 3: Speak with an attorney to help you determine your legal options

STEP 4: File a civil claim against your employer for financial losses experienced

STEP 5: Ensure that you have an independent contractor agreement in place when engaging in future endeavors

An employee’s misclassification in California is pretty serious and complicated and could require a jury or judge trial to resolve. However, the law does entitle you to compensation for the losses you experienced as a result of their erroneous misclassification. Getting legal advice from an attorney will help you work through any Department of Labor (DOL) issues to pursue a remedy on your behalf.

When engaging with a hiring company as an independent contractor in California, it is critical to have a fully-executed independent contractor agreement active. If you need help drafting an independent contractor agreement, post your project to ContractsCounsel for free. Sign-up today!

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

View Diana
Member Since:
September 22, 2020

Diana M.

Patent Attorney
Free Consultation
Get Free Proposal
Boca Raton, FL
10 Yrs Experience
Licensed in FL
Florida Coastal School of Law

Diana is a registered patent attorney and licensed to practice law in Florida and in federal courts in Florida and in Texas. For nearly a decade, Diana has been known as the go-to brand builder, business protector, and rights negotiator. Diana works with individual inventors, startups, and small to medium-sized closely held business entities to build, protect, and leverage a robust intellectual property portfolio comprising patents, trademarks, copyrights, trade dress, and trade secrets.

View Brandon
Member Since:
October 1, 2020

Brandon L.

Managing Partner, Attorney
Free Consultation
Get Free Proposal
Dallas-Fort Worth
11 Yrs Experience
Licensed in TX
Juris Doctor – Pepperdine University School of Law – Malibu, California

Brandon is a Texas Super Lawyer®, meaning he is among the top 2.5% of attorneys in his state. He has designed his practice to provide a unique ecosystem of legal support services to business and entrepreneurs, derived from his background as a federal district law clerk, published biochemist, and industry lecturer. Brandon is fluent in Spanish, an Eagle Scout, and actively involved with the youth in his community. He loves advocating for his clients and thinks he may never choose to retire.

View Maxwell
Member Since:
September 24, 2020

Maxwell L.

Lawyer, Owner
Free Consultation
Get Free Proposal
New Berlin, WI
11 Yrs Experience
Licensed in WI
Marquette University Law School (JD)

Firm rated best ADR firm for Wisconsin and won an award for cultural innovation in dispute resolution from acquisition international magazine in 2016 and it was rated "Best of Brookfield" by Best Businesses in 2015. Attorney Maxwell C. Livingston was rated 10 best in Labor & Employment Law by American Institute of Legal Counsel and 40 Under 40 by American Society of Legal Advocates for 2016; he also won 10 Best by American Institute of Family Law Attorneys. He is licensed in Wisconsin in all state and federal courts, and in the 7th Circuit Court of Appeals, wherein he won a landmark decision in McCray v. Wielke.

View Richard
Member Since:
October 1, 2020

Richard E.

Senior Partner, Attorney
Free Consultation
Get Free Proposal
Dallas-Fort Worth
14 Yrs Experience
Licensed in TX
Juris Doctor – University of LaVerne College of Law

Richard is a wizard at taking on bureaucracies and simply getting the job done. His clients value his straight-forward counsel and his ability to leverage a top-notch legal staff for efficient and effective results. Richard is a professional engineer, professor of law, and has been named among the top 2.5% of attorneys in Texas by the Super Lawyers®. When he is not driving results for his clients, Richard can be found with his small herd on his Texas homestead.

View Seth
Member Since:
September 30, 2020

Seth S.

Free Consultation
Get Free Proposal
New York
8 Yrs Experience
Licensed in NY
Touro Law School

I am an attorney admitted in NY, with over 6 years of experience drafting, reviewing and negotiating a wide array of contracts and agreements. I have experience in Sports and Entertainment, Real Estate, Healthcare, Estate Planning and with Startup Companies. I am confident I can assist you with all of your legal needs.

View Rishma
Member Since:
October 1, 2020

Rishma E.

Free Consultation
Get Free Proposal
Miramar, FL
8 Yrs Experience
Licensed in FL
St. Thomas University School of Law

Rishma D. Eckert, Esq. is a business law attorney who primarily represents domestic and international companies and entrepreneurs. A native of both Belize and Guyana, she remains engaged with the Caribbean community in South Florida: as a Board Member and General Counsel for the Belize American Chamber of Commerce of Florida, and Member of the Guyanese American Chamber of Commerce. She holds a Bachelor of Laws degree (LL.B.) from the University of Guyana in South America, a Master’s degree in International and Comparative Law (LL.M.) from Stetson University College of Law in Gulfport, Florida, and earned a Juris Doctor degree (J.D.) from St. Thomas University School of Law in Miami, Florida. Licensed to practice in the State of Florida and the Federal Court in the Southern District of Florida, Mrs. Eckert focuses her passion and practice on domestic and international corporate structuring and incorporation, corporate governance, contract negotiation and drafting, and trademark and copyright registrations.

View Mark
Member Since:
October 2, 2020

Mark A.

Free Consultation
Get Free Proposal
Jacksonville, FL
18 Yrs Experience
Licensed in FL
University of Florida

Mark A. Addington focuses his practice primarily on employment litigation, including contractual disputes, restrictive covenants (such as non-competition, non-solicitation, or confidential information restrictions), defense of wage and hour, harassment, retaliatory discharge, disability, age, religion, race, and sex discrimination.

View Kiel
Member Since:
October 2, 2020

Kiel G.

Free Consultation
Get Free Proposal
Hollywood, FL
5 Yrs Experience
Licensed in FL
Florida State University

Founder and Managing partner of Emerald Law, PLLC, a business law firm specializing in contract drafting and corporate transactions. Kiel worked as in house counsel for a variety of companies before launching his own firm, and most recently served as the Chief Legal Officer for an international private equity firm.

View Jay
Member Since:
October 14, 2020

Jay P.

Free Consultation
Get Free Proposal
8 Yrs Experience
Licensed in CA
Concord Law School

Jay Pink is an attorney who works with businesses and families on estate planning, and business law matters. Having his CPA license, and working in multiple family businesses over his career has positioned him to provide valuable insight on successful business operations. He has formed many entities - LLC's, Corps Partnerships and non-profit organizations.

View Jane
Member Since:
October 8, 2020

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call