Independent Contractor

An independent contractor is someone in business for themselves who sells services to clients. They typically set their own hours and methods, use their own tools, can work for many clients, and can make or lose money based on how they run the business. They receive a 1099 instead of a W-2, pay their own self-employment taxes, and are not covered by most wage laws.

The problem is misclassification: a company labels workers as contractors to save on overtime, payroll taxes, benefits, and expense reimbursement, while still controlling them like employees. Courts look past the label. Under federal law, the question is whether the worker is economically dependent on the company or truly in business for themselves. In California, Labor Code section 2775 presumes a worker is an employee unless the company proves all three prongs of the ABC test, including that the work is outside the usual course of the company's business.

Signs of misclassification include a company setting your schedule and pay rate, requiring you to wear its uniform or follow detailed rules, disciplining or "deactivating" you, and having you do the core work the company sells. Delivery drivers, truckers, cleaners, installers, and app-based workers bring many of these claims, often as class or collective actions. Some contractor agreements include arbitration clauses that affect how a claim proceeds.

See our pages on misclassification lawsuits, truck driver and owner-operator claims, and unpaid overtime.