Many companies try to save on operating costs by labeling their workers as “independent contractors” or “owner-operators.” Through such classifications, companies avoid paying for work-related expenses, including insurance; ignore overtime and minimum wage laws; fail to provide meal breaks and paid-rest periods; and do not offer paid sick leave as required under California law. These “independent contractor” classifications are often unlawful, even if the worker signed a contract saying they were an independent contractor. 

California law protects workers from being misclassified as “independent contractors” through strict requirements in its “ABC” test. Under that test, a hiring company can only lawfully classify a worker as an “independent contractor” if it can show each of the following: 

(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work; and 

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and  

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. 

If the company cannot prove all three, then the worker is an employee and entitled to many of the work-place protections required under California laws.  

Many companies will likely fail the “B” requirement because their so-called “independent contractors” provide the very service or product that the companies sell to their customers. Also, workers who perform all or nearly all their work for one company or make little effort to advertise or market for other work cannot be “independent contractors” under the “C” requirement.  

Federal laws, such as the Fair Labor Standards Act, also have broad definitions for who is an employee, and misclassifications may result in monies owed under those laws as well.   

Lawyers at Kaufmann & Gropman have successfully prosecuted many class, collective, and individual lawsuits on behalf of workers who have been misclassified as “independent contractors,” including pick-up-and-delivery drivers, shuttle drivers, food distributors, drayage drivers, workers who deliver and install appliances and furniture, floor and carpet installers, political canvassers, and asbestos removal workers. The recoveries have often been substantial, recouping work-related expenses and wages going back several years.