Home Blog California Independent Contractor Laws Broken Down

California Independent Contractor Laws Broken Down

Jump to Section

Californian Independent Contractors

Independent contractors are different from traditional employees which has led 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 should be aware that independent contractors are not entitled to company benefits, such as workers’ compensation or retirement, and are ineligible for unemployment benefits.

Further, independent contractors are responsible for paying self-employment taxes, which include both the employer and employee portions of Social Security and Medicare taxes. In addition, independent contractors generally must provide supplies necessary to complete the projects they 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 that 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.

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 Court issued a critical decision regarding the matter of Dynamex Operators West v. Superior Court of Los Angeles. The 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 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.

It should be noted that not all independent contractors in California are subject to the ABC test. While the test is used in some cases to determine independent contract status, it is not the only test used and does not apply universally to all independent contractors in the state.

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.

California Assembly Bill 51

AB 51 prevents companies and employers from requiring employees and job applicants to agree to arbitration. 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, the statute also provides for reasonable attorneys’ fees reimbursement and injunctive relief. Employers violating 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:

  1. Preserve any and all communications between you and the company
  2. Review the types of employment contracts in place for clarity regarding your relationships
  3. Speak with an attorney to help you determine your legal options
  4. File a civil claim against your employer for financial losses experienced
  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 an 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!

Overall, it is important to consult with a labor lawyer for personalized legal advice regarding California independent contractor laws and how they may apply to specific situations.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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

Angela S. on ContractsCounsel
View Angela
5.0 (1)
Member Since:
February 12, 2025

Angela S.

Founding Atttorney
Free Consultation
Denver, Colorado
24 Yrs Experience
Licensed in CO, NY
Georgetown University Law Center

Business law attorney with over 20 years of experience in contracts, entity formation and risk management

Recent  ContractsCounsel Client  Review:
5.0

"I hired Angela for a Demand Letter project in an attempt to recover a security deposit. She's very knowledgeable about Real Estate law & was empathetic about my situation. Having to hire an attorney for any case, whether simple or complex, can be daunting. That being said, Angela is very personable & addressed all my questions & concerns which put my mind at ease. I'd highly recommend Angela for any legal needs if you require a reliable attorney"

Abbi N. on ContractsCounsel
View Abbi
5.0 (1)
Member Since:
February 18, 2025

Abbi N.

Founding and Practicing Attorney
Los Angeles and DC
10 Yrs Experience
Licensed in CA DC
University of Pacific, McGeorge School of Law

I provide efficient, business-focused contract counsel services to companies and law firms, drawing on my experience as a Supervising Attorney and former Assistant Attorney General handling complex litigation, contracts, and regulatory matters across multiple jurisdictions. I deliver practical, strategic solutions—whether drafting and negotiating agreements, advising on employment and business issues, or managing risk before disputes arise. Clients hire me because I step in quickly, provide clear guidance, and produce high-quality work without unnecessary overhead.

Stephen R. on ContractsCounsel
View Stephen
5.0 (7)
Member Since:
February 18, 2025

Stephen R.

Attorney
Free Consultation
Boston
17 Yrs Experience
Licensed in MA, NY
New York Law School

Steve Reich is licensed to practice in both New York and Massachusetts and is based in Boston. He assists with environmental litigation and other complex litigation and heads the firm's intellectual property practice, including copyright and trademark registration and protection. Other practice areas include commercial contract drafting and civil litigation.

Recent  ContractsCounsel Client  Review:
5.0

"Fast, professional, and articulate—I would work with Stephen again."

Saranne W. on ContractsCounsel
View Saranne
5.0 (1)
Member Since:
February 20, 2025

Saranne W.

Principal
Free Consultation
Holmdel, New Jersey
14 Yrs Experience
Licensed in NJ, NY
Seton Hall University School of Law

Saranne (Sara) is the owner and founder of S. Weimer Law, LLC. Sara has over a decade of experience practicing at prominent law firms. Prior to opening S. Weimer Law, Sara spent several years at a premiere international law firm representing companies and their leaders in every facet of the employment relationship. Sara has represented entities of all sizes, including some of the largest Fortune 500 companies, small start-ups, and key executives. Sara's experiences spans across various industries, including pharmaceutical, medical device, healthcare, financial services, technology, transportation, telecommunication, entertainment, non-profit, hospitality, and private equity. Sara has successfully represented her clients in single-plaintiff litigations, multi-plaintiff litigations, class and collective actions, agency charges, government audits, and disputes with competitors. Sara has extensive experience handling claims of discrimination, harassment, retaliation, leave interference, pay equity, medical and religious accommodations, wage and hour issues, whistleblower allegations, non-competes, restrictive covenants, and wrongful termination. Sara is also regularly retained to conduct internal investigations, respond to government inquiries, conduct workplace training, and negotiate executive agreements.

David G. on ContractsCounsel
View David
Member Since:
February 5, 2025

David G.

Business & Technology Lawyer
Free Consultation
Dallas, Texas
16 Yrs Experience
Licensed in TX
The University of Arkansas School of Law (Fayetteville)

I specialize in commercial and technology agreements, and general corporate and real estate matters. My passion for transactional and corporate work grew out of helping small and medium sized businesses with agreements of all types and real estate matters. Though I primarily represent large private and publicly traded Fortune 500 companies, I very much enjoy representing new and emerging businesses. From the private family office or new start-up to the rapidly growing and mature company, I have a proven track record of exceeding expectations in helping clients achieve their vision.

Cameron D. on ContractsCounsel
View Cameron
Member Since:
February 8, 2025

Cameron D.

Partner
Free Consultation
Houston, Texas
14 Yrs Experience
Licensed in TX
South Texas College of Law

I’m a Texas-based business attorney focused on helping companies—from early-stage startups to established enterprises—navigate their legal needs with clarity and confidence. My practice centers on contracts, corporate governance, and international business matters. Whether you're forming a new company, reviewing a commercial agreement, or expanding into new markets, I bring practical, business-minded legal guidance tailored to your goals. Clients appreciate that I don’t just “paper” deals—I help them understand what they’re signing and protect their long-term interests. I believe in clear communication, fair flat fees, and efficient turnarounds, especially when time is money. In addition to domestic clients, I work with a range of foreign individuals and companies doing business in the U.S., and regularly assist with cross-border transactions, regulatory issues, and contract negotiation. If you’re looking for an attorney who values relationships, communicates clearly, and knows how to get deals done—I’d be glad to connect.

Maria H. on ContractsCounsel
View Maria
Member Since:
February 12, 2025

Maria H.

Managing Partner
Free Consultation
Grove City, Ohio
3 Yrs Experience
Licensed in OH
Capital University Law School

Motivated, hardworking, and passionate attorney with strong organizational skills. Skilled in researching, interpreting, and writing legal documents. Detailed-oriented individual with excellent time management and problem-solving skills. Ability to handle multiple projects simultaneously with a high degree of accuracy. I have WealthCounsel available for Ohio.

Nicholas M. on ContractsCounsel
View Nicholas
Member Since:
February 21, 2025

Nicholas M.

Attorney at Law
Free Consultation
Los Angeles
4 Yrs Experience
Licensed in CA
Glendale University College of Law

Since getting my license to practice 3 years ago, I have been spent my time as a trial attorney with district attorneys office and insurance defense covering disputes with contracts, landlord-tenant, auto accidents, premises liability, and contract disputes.

April W. on ContractsCounsel
View April
Member Since:
February 26, 2025

April W.

Real Estate Attorney
Free Consultation
Atlanta, Georgia
20 Yrs Experience
Licensed in GA
University of Georgia School of Law

I close residential and commercial real estate transactions. Myself and my paralegal work hard to ensure that every closing is properly executed. I can write title insurance policies with two companies First American and AmTrust. We are a small title company, but we are capable and efficient. I love what I do and I would love to provide closing services for you as well. I am also a licensed real estate agent. I do not actively practice real estate in the sales agent capacity because of my real estate closing practice. I remain current with policies, procedures, issues and trends. I am available to help anyone buy or sell a home or refer them to someone who will do an excellent job.

Carissa E. on ContractsCounsel
View Carissa
Member Since:
February 26, 2025

Carissa E.

Principal Attorney
Free Consultation
Chicago, IL
8 Yrs Experience
Licensed in IL
DePaul University College of Law

As a resident of the Chicago Southside, Attorney Carissa Essex is a dedicated mother, wife, and attorney. Carissa graduated from the Illustrious Spelman College in Atlanta, Georgia in 2012 with a Bachelor of Arts Degree in Political Science. She then returned to Chicago to obtain her Juris Doctorate in 2016 from DePaul University College of Law. After working in Corporate America for several years as a full-time Legal Project Manager practicing law part-time, Carissa decided to devote all of her time to her legal practice and founded Essex Law in early 2024. Focusing on Family Law and Real Estate Law matters, Essex Law provides exceptional and affordable services to all throughout the Chicagoland Area.

Jorge G. on ContractsCounsel
View Jorge
Member Since:
March 10, 2025

Jorge G.

Attorney
Free Consultation
Coral Gables, Florida
28 Yrs Experience
Licensed in FL
Nova Southeastern Law School

Transactional and litigation real estate attorney for over 25+ years. Other areas of practice include family law, probate and general civil litigation.

Find the best lawyer for your project

Browse Lawyers Now

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Need help with a legal contract?

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

CONTRACT LAWYERS BY TOP CITIES
See All Employment Lawyers

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer

Want to speak to someone?

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

Request a call

Find lawyers and attorneys by city