Misclassification

Employee or independent-contractor status follows the applicable legal test; a 1099 or contract label does not establish the result.

California construction · Lab. Code §§ 2775, 2781, 2750.5, 226.8

The general ABC rule in § 2775 places the burden on the hiring entity to show freedom from its control, work outside its usual course of business, and an independently established business of the same nature. Statutory exceptions can change the governing test.

Construction has a specific subcontracting provision in § 2781. When its conditions are all satisfied, the relationship is evaluated under § 2750.5 and the Borello standard instead of the ABC test. Those conditions include a written subcontract, required licensing, a separate business location, hiring authority, financial responsibility and an independently established business. Meeting the exception selects another test; it does not itself establish contractor status.

Section 2750.5 contains a presumption of employment for specified licensed construction work and requires a valid contractor’s license when the activity requires one. Section 226.8 separately prohibits willful misclassification. The classification inquiry should identify the work and applicable exception before relying on any label or tax form.

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