The ABC test, in plain language
You signed a "1099 agreement." Your boss called you a contractor. Your pay arrived without tax withholding, and at the end of the year a 1099-NEC showed up instead of a W-2. Then you got hurt on the job — and the answer to the obvious next question is "go file your own health insurance, you're a contractor."
That answer is often wrong. California Labor Code §2775, enacted as AB 5 in 2019 and codifying the California Supreme Court's Dynamex decision, presumes that a worker providing services for a hiring entity is an employee — not an independent contractor — unless the hiring entity proves all three elements of the ABC test[1]. The burden is on the hiring entity, not on you.
The three prongs:
A — Free from control and direction. The worker performs the work free from the control and direction of the hiring entity, both under the contract for performance and in fact. Setting hours, requiring uniforms, dictating tools, supervising the work product, requiring scheduled check-ins — each of these undercuts an "A" defense.
B — Outside the usual course of business. This is the prong that defeats most contractor claims. The work performed must be outside the usual course of the hiring entity's business. A bakery that hires "contract" delivery drivers cannot meet prong B, because delivery is part of how the bakery operates. A bakery that hires a contract plumber to fix a sink probably can.
C — Customarily engaged in independent trade. The worker must be customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. This usually requires evidence of the worker's own business — a license, multiple clients, advertising, or an established practice that exists outside the relationship with the particular hiring entity.
A hiring entity that fails on any one prong loses the contractor classification. Labor Code §3357 reinforces the presumption: any person rendering service for another, other than as an independent contractor, is presumed to be an employee[2].
Industry-specific exemptions
The Legislature, after AB 5 passed, layered on a series of statutory exemptions for specific industries and relationships. The exemptions are real, but they are narrow — each requires meeting a specific multi-element test, and falling outside the exemption returns the worker to the ABC test by default.
The principal categories:
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Referral agencies (§2777) — covering certain agencies that connect clients with service providers (tutoring, dog walking, home cleaning) — apply only if the agency meets a list of specific criteria, including that it does not control the service provider's hours, work, or rates
[3] . -
Professional services (§2783) — covering lawyers, doctors, dentists, architects, engineers, designers, and others — exempt these professionals from the ABC test if they meet specific independence criteria
[4] . -
Construction subcontractors (§2781) — covering licensed construction subs — exempt subs that hold a valid contractor's license and meet additional criteria around customary business operation
[5] . -
Business-to-business contracts (§2776) — covering bona fide contracts between two business entities — exempt the relationship if twelve specific criteria are met, including that the contractor maintains its own location, advertises, and serves multiple clients
[6] .
A worker fitting cleanly inside one of these statutory exemptions falls back to the older Borello multi-factor employee/contractor test, which considers control, the right to fire, and other indicia. Even under Borello, many "contractors" are actually employees — but the analysis is more fact-specific and less worker-favorable than the ABC test.
Gig economy workers and Prop 22
App-based delivery and rideshare drivers operate under a separate framework. Proposition 22, passed by California voters in 2020 and codified at Business & Professions Code §7448 et seq., classifies "app-based drivers" — Uber, Lyft, DoorDash, Instacart, and similar platforms — as independent contractors as a matter of state law, with a hybrid set of platform-provided benefits.
Those benefits include a wage floor (calculated on engaged time, not all online time), a healthcare stipend for drivers above a weekly hours threshold, and "occupational accident insurance" — a private insurance product the platforms purchase to cover work-related injuries. Occupational accident insurance is not workers' compensation. The coverage limits are lower, the benefit structure is different, and the procedural protections of the workers' comp system (the WCAB, the §5814 penalty, the Medical Provider Network rules) do not apply.
Prop 22 has been the subject of ongoing legal challenge — including litigation over whether it constitutionally restricts the Legislature's authority to provide a complete workers' comp system — and the framework continues to evolve. If you are a gig driver who was injured on an active delivery or ride, you may have rights under Prop 22's occupational accident insurance, and in some scenarios you may also have a misclassification challenge if the platform's actual operation does not match Prop 22's "app-based driver" definition. Our warehouse worker practice page covers a related set of questions for last-mile and gig delivery workers whose duties may put them outside Prop 22's narrow scope.
What to do if you are injured and labeled a contractor
The most important thing: do not let the "contractor" label stop you from filing. Even if you have signed a 1099 agreement and have been treated as a contractor for years, file the DWC-1 claim form with your employer immediately and request medical care. The 30-day reporting window in §5400 applies regardless of how the relationship was structured on paper.
If the employer denies the claim on classification grounds — typically a denial letter that says "you are not an employee, this claim is denied" — file an Application for Adjudication of Claim with the WCAB. The WCAB has jurisdiction to decide employee/contractor status as a threshold question, and the decision binds the parties for purposes of the workers' comp case.
While that process plays out, document everything about your work relationship: who set your schedule, who provided your tools, whether you wore the company's logo, whether you were free to take other jobs, how you were trained and supervised, whether you used the company's email address, and how you were paid. Each of those facts feeds into one of the ABC prongs, and the more contemporaneous documentation you have, the stronger the case. The discipline we describe in our first 24 hours resource applies just as much to misclassified workers as to W-2 employees.
The label on your tax form does not control. What controls is what your work actually looked like — and after AB 5, the law starts by assuming you were an employee.
The reclassification process
When the WCAB finds that a worker was misclassified, the consequence is straightforward: workers' comp coverage applies retroactively to the date of injury, not from the date of the WCAB's order. The carrier (or, if the employer was uninsured, the Uninsured Employers Benefits Trust Fund under §3716) is responsible for the full benefit package — TTD, medical care, PD, and any applicable supplemental benefits — as if the worker had always been correctly classified.
A workers' comp reclassification order is also evidence — though not always controlling evidence — for a parallel wage-and-hour claim. Misclassified workers are typically owed unpaid overtime, missed meal and rest breaks, expense reimbursement under §2802, and waiting-time penalties under §203. Those claims belong in a different forum (Labor Commissioner or civil court), but they often run on the same factual foundation as the comp case. Our denied-claim options resource walks through the broader procedural picture when a carrier denies on classification or any other ground.
If your employer told you that you cannot file a workers' comp claim because you are a contractor, please call us. That conversation, on its own, is one of the strongest indicators we see that the classification will not survive a serious review.
This guide is general legal information, not legal advice. For advice about your specific situation, contact our office.
References
- Cal. Labor Code §2775 (ABC test; employee presumption under AB 5) — California Labor Code
- Cal. Labor Code §3357 (employee presumption — general) — California Labor Code
- Cal. Labor Code §2777 (referral agency exemption) — California Labor Code
- Cal. Labor Code §2783 (professional services exemption) — California Labor Code
- Cal. Labor Code §2781 (construction subcontractor exemption) — California Labor Code
- Cal. Labor Code §2776 (business-to-business contracting exemption) — California Labor Code
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