CA · IND-CONTR · Updated July 2026 · Free
California Independent Contractor Agreement
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California at a glance: Classification Test: ABC Test (Cal. Labor Code § 2775) · Prong B Restriction: Work must be outside client's core business · Notarization Required: No
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Overview
Independent Contractor Agreements in California
California independent contractor agreements are governed by the California Labor Code and Assembly Bill 5 (AB 5). California applies the exceptionally strict **ABC Test** (Cal. Labor Code § 2775) for worker classification.
Under the ABC Test, a worker is presumed to be an employee unless the client proves the worker is free from control, performs work outside the client's usual business course (Prong B), and is engaged in an independent trade. Numerous professional exemptions (such as for consultants, lawyers, and writers) exist but are subject to a complex "business-to-business" exemption test.
Key Facts
California Independent Contractor Agreement — Quick Reference
| Requirement | California Rule |
|---|---|
| Classification Test | ABC Test (Cal. Labor Code § 2775) |
| Prong B Restriction | Work must be outside client's core business |
| Notarization Required | No |
| Governing Law | Cal. Labor Code § 2775 |
Legal Requirements
California Legal Requirements
- Must comply with the ABC test or satisfy the multi-factor business-to-business exemption.
- Contractor must retain control over how the services are executed.
- Contractor must be responsible for all licensing, business taxes, and insurance.
Governing Laws
California Governing Laws
Cal. Labor Code § 2775
Worker Classification (AB 5)
Codifies the ABC Test, making it the default framework for determining employee vs. contractor status.
Cal. Labor Code § 2750.3
Professional Exemptions
Outlines statutory exceptions to the ABC Test for qualified business arrangements.
Read the full text of these laws at Cornell Law School's California legal resources or your state legislature's official website.
Questions & Answers
California Independent Contractor Agreement — Frequently Asked Questions
How does AB 5 affect freelancers in California?
Under AB 5, if your freelance work is in the same line of business as the client (e.g., a freelance writer writing for a publisher), you may be legally considered an employee unless you fit into a specific professional service or business-to-business exemption.
What is the penalty for worker misclassification in California?
Willful misclassification carries civil penalties of $5,000 to $25,000 per violation, plus liability for unpaid payroll taxes, workers' compensation, and overtime.