US-CaliforniaAm I classified as an employee or independent contractor under AB 5?
Under AB 5, you are presumed an employee unless the hiring entity proves all three parts of the 'ABC test' — otherwise, you’re legally an employee in California.
What the Law Says
California’s Assembly Bill 5 (AB 5), codified in Labor Code § 2750.3, establishes a strict legal test to determine whether a worker is an employee or independent contractor — primarily for wage orders, unemployment insurance, and labor law protections.
Before AB 5, courts and agencies often used the flexible 'Borello test' (based on multiple factors like control and skill). AB 5 replaced that with the 'ABC test' for most workers covered by California’s wage orders, Unemployment Insurance Code, and Labor Code provisions.
Under the ABC test, a worker is *presumed* an employee — unless the hiring entity proves *all three* of these conditions:
A. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract and in fact;
B. The worker performs work that is outside the usual course of the hiring entity’s business; and
C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Statutory TextFor purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied: (A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact. (B) The person performs work that is outside the usual course of the hiring entity’s business. (C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
— Labor Code § 2750.3(a)(1) — Employment status: independent contractors
What Courts Have Said
California courts have consistently upheld the strict application of the ABC test and clarified its scope and exceptions.
Established the ABC test in wage order cases; AB 5 later codified this standard across broader labor laws.
Confirmed that AB 5 applies retroactively to claims arising before its 2020 effective date when based on wage order violations.
What to Do
Review your work arrangement against the ABC test — especially whether your role falls 'outside the usual course' of the company’s business (Part B, often the hardest to satisfy).
If you believe you’ve been misclassified, file a wage claim with the Labor Commissioner within 2 years (or 3 years for willful violations).
Consult a California employment lawyer — misclassification can affect minimum wage, overtime, rest breaks, unemployment benefits, and workers’ compensation.
Note exemptions: AB 5 includes over 50 occupational exemptions (e.g., licensed physicians, lawyers, accountants, commercial fishermen); check Labor Code § 2750.3(b) to see if yours applies.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.