Independent Contractor Agreement / California
Independent Contractor Agreements in California
California treats worker classification more strictly than most states. Before you write an independent contractor agreement here, it helps to know that a written contract does not, by itself, make someone a contractor. California courts and agencies apply the ABC test, and they start from the assumption that the worker is an employee unless you can prove otherwise.
Generate an independent contractor agreement →California uses the ABC test
Under Labor Code section 2775, a worker is presumed to be an employee. To classify them as an independent contractor, the hiring business has to satisfy all three parts of the ABC test. Part A: the worker is free from your control and direction in how the work is done. Part B: the work is outside the usual course of your business. Part C: the worker is independently established in that trade, for example by serving other clients or holding their own business license. If any one part fails, the worker is an employee under California law, whatever the contract says.
Part B is the one that catches people
The "outside the usual course of your business" requirement is where many arrangements break down. A design studio generally cannot classify the designers who do its core client work as contractors, because that work is the business. The same logic applies to a delivery company and its drivers. If the person is doing the thing you sell, California will usually treat them as an employee.
Exemptions fall back to the Borello test
California law lists more than 100 exemptions from the ABC test, including licensed professions such as doctors, lawyers, architects, and accountants, plus certain business-to-business and professional-services relationships that meet specific conditions. When an exemption applies, classification is decided under the older Borello test, which weighs the overall degree of control and several secondary factors rather than the three fixed prongs.
What to put in the agreement
A California independent contractor agreement should describe the scope of work, payment terms, ownership of work product, confidentiality, and termination. It should also reflect the reality of an arm's-length relationship: the contractor controls how and when the work gets done, uses their own tools, and is free to work for others. Contract language helps, but California looks at how the relationship actually operates.
Frequently Asked Questions
Does a signed contract make someone an independent contractor in California?
No. California applies the ABC test regardless of what the contract says. If the working relationship does not meet all three prongs, the worker is an employee, and misclassification can carry back pay, taxes, and penalties.
What is the ABC test in California?
It is the three-part standard in Labor Code 2775 for deciding whether a worker is a contractor. The worker must be free from the hiring party's control, doing work outside that party's usual business, and independently established in the trade. All three must be true.
Are any workers exempt from the ABC test?
Yes. California lists over 100 exemptions, including several licensed professions and qualifying business-to-business relationships. Exempt relationships are judged under the Borello control test instead.
Other states
This page is general information about California law, not legal advice, and it does not create an attorney-client relationship. Laws change; for a specific situation, consult a licensed attorney in your state. Last reviewed 2026-07-10. Sources: California DIR: Independent contractor vs employee, California FTB: Worker classification and AB 5 FAQ.