Your Rights as a California Worker

Are you classified as an independent contractor but feel like you should be receiving employee benefits? Many California workers find themselves in this confusing situation, unsure whether their employment classification is correct or if they’re being shortchanged by their employer.

The distinction between employees and independent contractors has significant implications for your rights, benefits, and compensation. Misclassification can cost you thousands of dollars in overtime pay, workers’ compensation coverage, unemployment benefits, and other protections that California law guarantees to employees.

Understanding the ABC test — California’s primary method for determining worker classification — can help you identify if you’ve been misclassified and what steps you can take to protect your rights. The employment law attorneys at Glaser Labor Law will walk you through everything you need to know about this important legal standard and how it affects your employment status.

What is the ABC Test?

The ABC test is California’s strict three-part rule for determining whether a worker should be classified as an employee or an independent contractor. This test became the state’s default standard when Assembly Bill 5 (AB5) was signed into law, codifying the landmark Dynamex decision from the California Supreme Court.

Under the ABC test, all workers are presumed to be employees unless the hiring company can prove that all three specific conditions are met. This represents a significant shift from previous standards, placing the burden of proof squarely on employers to justify independent contractor classifications.

The test gets its name from its three components, labeled A, B, and C, each representing a different requirement that must be satisfied simultaneously. If even one condition fails, the worker must be classified as an employee, not an independent contractor.

Why Was the ABC Test Created?

California lawmakers implemented the ABC test to address widespread employee misclassification that was costing workers billions in lost wages and benefits. Before this stricter standard, many companies exploited looser classification rules to avoid paying for workers’ compensation, unemployment insurance, overtime wages, and other employee protections.

The rise of gig economy companies like Uber and Lyft brought this issue into sharp focus, as these platforms classified drivers as independent contractors despite exercising significant control over their work. The ABC test was designed to close these loopholes and ensure that workers who function as employees receive the protections they deserve.

By creating a presumption of employment, the law shifted the conversation from “prove you’re an employee” to “prove you’re truly independent.” This change has helped thousands of California workers recover wages and benefits they were previously denied.

Understanding the Three Factors of the ABC Test

Each component of the ABC test addresses a different aspect of the working relationship. All three must be satisfied for independent contractor status to be valid.

Factor A: Absence of Control

The worker must be free from the control and direction of the hiring entity in performing the work, both under the contract and in fact. This goes beyond what’s written in a contract — courts look at the actual working relationship.

Signs that Factor A is not met include:

• The company sets your work schedule or requires you to work specific hours
• You must follow detailed instructions about how to complete tasks
• The company provides training on how to perform the work
• You’re required to attend meetings or check in regularly
• The company monitors your work closely or requires regular reports

For example, if a delivery driver must wear a company uniform, follow specific routes, and use company-provided equipment, they likely fail this test even if their contract says they’re independent.

Factor B: Outside the Usual Course of Business

The work performed must be outside the usual course of the hiring entity’s business. This factor examines whether the work is central to the company’s core operations.

A restaurant hiring a web developer to build their website would likely satisfy this condition, as web development isn’t part of a restaurant’s usual business. However, if the same restaurant classified its servers or cooks as independent contractors, it would fail this test, as food service is clearly the restaurant’s primary business.

This factor has proven particularly challenging for gig economy companies. Uber, for instance, struggles to argue that driving is outside its usual course of business when transportation services are its primary offering.

Factor C: Customarily Established Business

The worker must be customarily engaged in an independently established trade, occupation, profession, or business of the same nature as the work performed. This means the worker operates as a genuine business entity in the open market.

Evidence supporting Factor C includes:

• Having a business license and operating under a business name
• Advertising services to the general public
• Maintaining a separate business location
• Working for multiple clients simultaneously
• Setting your own rates and negotiating contracts
• Having your own business insurance and equipment

A freelance graphic designer who works for multiple clients, maintains a portfolio website, and operates under their own business name would likely meet this requirement. Someone who only works for one company and has no independent business presence would not.

What Happens if You Are Misclassified?

Misclassification as an independent contractor when you should be an employee can have serious financial consequences. You may be missing out on numerous rights and protections that California law guarantees to employees.

When you’re misclassified, your employer avoids paying for workers’ compensation coverage, unemployment insurance, disability insurance, and their share of Social Security taxes. They also don’t have to provide overtime pay, meal and rest breaks, or comply with minimum wage laws in the same way they would for employees.

Additionally, misclassified workers often struggle with tax obligations since they’re responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This can result in a significant financial burden at tax time.

The good news is that if you’ve been misclassified, you have legal options. Employment law provides remedies for workers who have been denied their rightful status and the benefits that come with it.

Protect Your Rights with Legal Representation

If you suspect you’ve been misclassified as an independent contractor, don’t wait to seek legal advice. Employment law cases have strict deadlines, and evidence can become harder to gather over time.

The employment attorneys at Glaser Labor Law have more than four decades of combined legal experience representing California workers in misclassification cases. We’ve seen how companies use independent contractor classifications to exploit workers and avoid their legal obligations.

Contact us today to schedule a consultation. You deserve the benefits and protections that California law provides to employees, and we’re here to help you get them.

Glaser Labor Law

With deep roots in Southern California, Glaser Labor Law combines a focus on workplace rights with proven success in broader legal matters. Joel Glaser and his team bring decades of litigation experience to ensure every client receives strong, results-driven representation.