If you were labeled an independent contractor but treated like an employee, California law may say you were misclassified. An employee misclassification lawyer can help you recover pay and benefits you were denied, and can help employers classify workers correctly and defend against claims. In California, most workers are presumed to be employees under the ABC test unless the business proves otherwise.
Key Takeaways
- California presumes a worker is an employee under the ABC test (Labor Code section 2775) unless the hiring business proves all three parts.
- Many specific occupations are carved out and judged under the older Borello standard instead.
- Willful misclassification can bring penalties of $5,000 to $15,000 per violation under Labor Code section 226.8.
- A misclassified worker may be owed overtime, minimum wage, meal and rest premiums, and reimbursed expenses.
- Talk with a California employee misclassification lawyer at 877-780-4727. The consultation is free.
What counts as misclassification in California?
Misclassification happens when a worker is put in the wrong legal category. The two common forms are an employee wrongly called an independent contractor, and a regular employee wrongly called exempt from overtime.
The stakes are real. Independent contractors do not get many of the protections employees receive, such as overtime, paid breaks, and expense reimbursement. So the label on a contract is not what controls. California looks at the actual working relationship.
A business does not get to decide the category on its own. Classification is a legal test. If the relationship looks like employment, the worker is usually an employee no matter what the paperwork says.
The ABC test: California’s default for contractor status
For most jobs, California uses the ABC test in Labor Code section 2775. It starts by presuming the worker is an employee. To treat someone as an independent contractor, the hiring business must prove all three parts below. Fail even one, and the worker is an employee.
| Part of the test | What the business must prove |
|---|---|
| A. Control | The worker is free from the company’s control and direction in how the work gets done, both under the contract and in real life. |
| B. Outside the usual business | The work falls outside the usual course of the company’s business. A dress company hiring seamstresses to sew its dresses would likely fail this part. |
| C. Independent business | The worker truly runs an independent trade or business of the same kind and serves other clients, not just this one company. |
Because all three parts are required, many workers who signed a contractor agreement are still employees under this test.
The Borello exemption
The ABC test does not cover every job. Many specific occupations are carved out by statute and tested under the older Borello standard instead. Borello is a multi-factor test, and control over the work is a central factor in it.
The right test depends on the occupation. That is why it helps to confirm which standard applies before relying on any classification. Even under Borello, a written contract calling someone a contractor is not the end of the question. The real relationship still matters.
What misclassification can cost a worker
When a worker should have been an employee, the missed protections can add up. Recovery depends on the facts, but common categories include:
- Unpaid overtime and minimum wage, the core of most California wage and hour claims.
- Premiums for missed meal and rest breaks.
- Reimbursement of business expenses under Labor Code section 2802, such as mileage, tools, and phone costs.
- No workers’ compensation coverage for an on-the-job injury.
- Payroll-tax problems, because the employer did not pay its share and the worker carried a heavier tax burden.
These are categories, not promises. A lawyer can review your pay records and estimate what may apply to your situation.
Willful misclassification penalties
California also penalizes willful misclassification. Under Labor Code section 226.8, a business that voluntarily and knowingly treats an employee as a contractor can face civil penalties of $5,000 to $15,000 per violation. Higher penalties can apply for a pattern or practice.
These penalties are separate from the wages, premiums, and expenses a worker may be owed. They can be pursued through the Labor Commissioner or the courts. For a business, that is a strong reason to get classification right before a problem surfaces.
Exempt versus nonexempt: salary misclassification
Being paid a salary does not automatically make you exempt from overtime. That is a common mistake. To be exempt, an employee generally must meet two conditions, not just one.
- Pay: the employee generally must earn a salary of at least twice the state minimum wage for full-time work. California’s state minimum wage is $16.90 per hour as of January 1, 2026, and some cities and counties are higher.
- Duties: the employee must actually perform exempt executive, administrative, or professional duties. A job title alone is not enough.
If a salaried worker does not meet both, they may be a misclassified nonexempt employee who is owed overtime and breaks. You can read more on our California wage and hour page.
How misclassification claims are pursued
There is usually more than one path. An individual can bring an unpaid wage claim through the Labor Commissioner or in court, and Labor Code section 1194 allows recovery of attorney fees and costs on some wage claims.
When many workers are affected, claims may proceed as a class action or under PAGA, the Private Attorneys General Act, which lets an aggrieved employee pursue civil penalties on behalf of the state. PAGA has its own notice procedure. These larger matters often overlap with our California civil litigation practice. Time limits apply and vary by claim type, so it helps to act promptly.
For employers: classify, audit, and defend
Classification is a legal test, not a preference. A signed contractor agreement helps document the relationship, but the actual facts control. Employers who assume a contract settles the question can be surprised by a wage claim or an audit.
Auditing existing roles against the ABC test, and confirming when the Borello standard applies, reduces exposure to section 226.8 penalties and back-pay claims. Where a role does not pass, reclassifying early is usually cheaper than defending later. When an EDD or Labor Commissioner audit or a misclassification claim does arrive, it needs a measured, well-documented response.
How we help
We represent both sides of these disputes. For workers, we assess whether you were misclassified, calculate the categories of pay and expenses you may be owed, and pursue a claim through the Labor Commissioner, PAGA, or court, often on a contingency basis so there is no upfront cost.
For employers, we audit and structure contractor relationships, draft agreements that reflect the real work, and defend audits and misclassification claims, usually on an hourly basis. Misclassification is one piece of a larger area, and our California employment lawyers can help with the rest.
Whether you think you were misclassified or you run a business that wants to get classification right, a short conversation can tell you where you stand. Call a California employee misclassification lawyer at 877-780-4727. The consultation is free.
Frequently Asked Questions
Start with the ABC test. If the business controls how you work, your work is part of its usual business, or you do not run your own independent business doing that work, you are likely an employee. The label in your contract does not decide it. The real relationship does. A lawyer can review your situation.
The ABC test in Labor Code section 2775 presumes a worker is an employee unless the business proves all three parts: the worker is free from its control, the work is outside its usual business, and the worker runs an independent business of the same kind. Fail one part, and the worker is an employee.
It depends on the facts, but categories often include unpaid overtime and minimum wage, premiums for missed meal and rest breaks, and reimbursement of business expenses under Labor Code section 2802. You may also raise unpaid payroll taxes and the lack of workers' compensation coverage. A lawyer can estimate what applies to you.
Under Labor Code section 226.8, willful misclassification can bring civil penalties of $5,000 to $15,000 per violation, with higher penalties for a pattern or practice. These penalties are separate from the wages and expenses a worker may be owed. Willful generally means the employer knew and did it anyway.
Possibly. A salary alone does not make you exempt. To be exempt from overtime, you generally must earn at least twice the state minimum wage for full-time work and actually perform exempt executive, administrative, or professional duties. If you do not, you may be a misclassified nonexempt employee owed overtime and breaks.
Test each role against the ABC test, not the job title or a signed contract. If the worker fails any of the three parts, treat them as an employee. Many occupations are carved out and judged under the older Borello standard, so confirm which test applies. Auditing relationships early reduces exposure, and we advise employers on this.
Borello is an older, multi-factor test that California still uses for many carved-out occupations instead of the ABC test. It weighs several factors, with control over the work as a central one. Because the right test depends on the occupation, it helps to confirm which one applies before relying on a classification.
It depends on the claim. Unpaid wage claims can go through the Labor Commissioner or court, and Labor Code section 1194 allows recovery of attorney fees and costs on some wage claims. PAGA claims for civil penalties follow their own notice procedure. Time limits apply, so it helps to act promptly.
