How do I determine if a worker is an employee or an independent contractor under California's AB 5 test?

Under California law, you must presume a worker is an employee unless you can prove their work meets a strict, three-part standard known as the "ABC test." Here is how to determine a worker's status: Step 1: Presume the Worker is an Employee California law begins with the assumption that every worker is an employee. The responsibility is on you, the hiring entity, to gather evidence and prove that the worker is an independent contractor. Step 2: Apply the ABC Test You must prove the worker satisfies ALL THREE of the following conditions to be classified as an independent contractor: (A) The worker is free from your control and direction regarding how they perform their work, both in the contract and in reality. (B) The worker performs work that is outside the usual course of your business. For example, a bakery hiring a plumber. (C) The worker is customarily engaged in an independently established trade, occupation, or business of the same type as the work they are performing for you. Step 3: Check for Professional and Business-to-Business Exemptions Review California Labor Code sections 2776-2784. The law provides dozens of specific exemptions from the ABC test for certain occupations (e.g., licensed doctors, lawyers, engineers) and specific contracting relationships (e.g., certain business-to-business contracts). You can find the code on the official California Legislative Information website. Step 4: Apply the "Borello" Test if an Exemption Applies If the worker's role fits a specific exemption, you are not done. You must then apply the older "Borello" multi-factor test. This test primarily examines your right to control the details of the work, but also considers other factors like who supplies the tools, the method of payment, and the duration of the relationship. Important details and nuances: You must be able to prove all three parts of the ABC test. If you can only prove two of the three, the worker is an employee. Collect and maintain documents like contracts, business licenses from the worker, and invoices to support your classification. Warnings and limitations: The penalties for misclassifying an employee as an independent contractor are severe. They can include liability for back pay, unpaid payroll taxes, workers' compensation insurance premiums, and other significant fines. This is general information and does not constitute legal advice. For complex situations, consult with a qualified California attorney.