When is a worker an independent contractor in California?
Rarely, and calling someone a contractor does not make them one. Under the ABC test adopted in Dynamex (2018) and codified at Labor Code section 2775, a worker is presumed an employee unless the hiring entity proves all three parts: freedom from control, work outside the hirer's usual business, and an independently established trade.
The B prong is where most small-business arrangements fail. If the work being performed is part of what the company normally does — a restaurant hiring a cook, a cleaning company hiring a cleaner — it is very difficult to satisfy, no matter how the relationship is papered.
All three parts must be met, and the burden is on the hiring entity, not the worker. A signed contractor agreement, an invoice, and a 1099 are evidence of what the parties called the arrangement; they do not answer the statutory test.
Statutory exemptions exist for a long list of occupations and for certain genuine business-to-business contracting relationships. Those exemptions do not make a worker a contractor either — they move the analysis back to an older, multi-factor common-law test that still has to be satisfied.
Misclassification is expensive precisely because it is cumulative. It reaches unpaid overtime, missed break premiums, unreimbursed expenses, wage statements, payroll taxes and workers' compensation, all at once and usually across several years.
Sources
Last reviewed 2026-08-09. Informational only — not legal advice. California rules change; confirm against the current source before acting.