What Are My Rights in California as an Independent Contractor?

Today millions of people across the country consider themselves independent contractors. The rise of the “gig economy” has enticed countless individuals to sever traditional employer-employee relationships in favor of more flexibility. If you have joined this growing trend, you need to know your rights as an independent contractor and ensure you are not being misclassified, causing you to lose out on certain employee benefits and protections.

At LNN, we provide dedicated representation for workers who have been mistreated by their employers. Whether you are an independent contractor who is not getting paid or an employee who has been misclassified, we can help. Contact our office today at (213) 232-4848 for a free consultation. 

Defining Employment Status in California

In 2019, Governor Gavin Newsom signed Assembly Bill 5 into law, which seeks to establish when a person can be appropriately classified as an independent contractor. The bill put forth the ABC test, a three-prong checklist in which all conditions must be satisfied.

In order to be classified as an independent contract, the ABC test requires:

1. The worker is to be “free from the control and direction of the hiring entity in connection with the performance of the work;”
2. The worker must perform work that is “outside the usual course of the hiring entity’s business;” and
3. The worker must be “customarily engaged in an independently established trade, occupation, or business of the same nature.”

Over the past two years, the law has come under scrutiny. While still in effect, there have been modifications that allow companies to treat workers as independent contractors even though all of the conditions of the ABC test have not been met. Because of the complexities of AB 5, it is important to discuss any questions about your employment status directly with an experienced employment lawyer. 

California’s Freelancer Law (AB 2257) Explained

Governor Gavin Newsom signed California Assembly Bill 2257 into law in 2020. The legislation amended the restrictive AB 5 worker classification law by dramatically expanding the list of exempted professions. It now includes more than 100 creative and professional freelancers, provided the business does not replace a permanent employee with that freelancer.

The new regulations allow individuals to remain independent contractors rather than employees. It replaces the narrow “ABC” test with the more flexible Borello test for specific professions, such as writers, photographers, musicians, and translators. It also eliminates the 35-submission limit while providing clearer, less rigid requirements for business-to-business contracting that allow a freelancer’s home to qualify as their official location of business.

To be classified as an independent contractor under these exemptions, specific conditions must generally be met. For example, having a written contract with specific payment terms and IP rights and having the ability to work for multiple clients are generally qualifying conditions.

Your Rights as an Independent Contractor

While employees are afforded certain protections under state and federal law, independent contractors do have several rights. If you are classified as an independent contractor but are not being afforded any of these rights, you need to contact an attorney. 

Rights you have as an independent contractor:

• Right to Control – you have the right to control the “manner and means of work.” You have the right to make decisions about where and how you work. If a business entity begins exercising control over your where, when, or how you work, you might be misclassified and entitled to protections and benefits as an employee. Your right to control includes the right to advertise and manage your business.
• Right to a Contract – Just because you are an independent contractor does not mean that you do not have the right to a contract detailing the terms of the work agreement, including the parameters of the project, how much you will be paid, and when you will receive payment.

• Right to Payment – As an independent contractor, it is in your best interest to have a clearly defined contract that describes how and when you will be paid. If a company fails to pay you for your work, you could then pursue legal action.

• Right to Pursue Legal Action – If your rights as an independent contractor are being violated or if you believe that your employment status was misclassified, you have the right to pursue legal action. You may be able to file a wage claim, report a labor law violation, or file a lawsuit. 

You have the right to be correctly classified as an employee or independent contractor. If you were not, you might have a valid claim against the company that hired you. It is essential to act quickly, as you only have a limited amount of time to file a lawsuit.

When Freelancers Are Not “Free”

In addition to AB 5 and AB 2257, independent contractors are now protected by the provisions of California’s Freelance Worker Protection Act (SB 988). The legislation went into effect in 2025 and mandates written contracts for services totaling $250 or more. If the contract does not specify a payment date, payment is due within 30 days of completion of services. Independent contractors could recover double damages, attorney fees, and costs if they prevail in a lawsuit for non-payment. Clients are also barred from retaliating against freelancers for exercising their rights under this law.

What Are the Risks of Misclassification?

Many California employers believe freelancers are cheaper than hiring someone on staff. This is primarily because the companies could avoid paying for payroll taxes, unemployment insurance, workers’ compensation, and benefits like health insurance. However, while freelancers may save on overhead and labor costs, companies could risk severe legal penalties for misclassifying employees as independent contractors, including:

•  Massive Financial Liabilities – Employers may be liable for unpaid federal and state income taxes, Social Security, Medicare contributions, and unpaid workers’ compensation premiums.
• Wage and Hour Claims – Misclassified workers could claim unpaid minimum wages, overtime pay, meal and break violations, and unreimbursed business expenses.
•  Significant Penalties and Fines – California Labor Code § 226.8 imposes fines up to $25,000 per violation for willful misclassification.
• Legal Action and Damages – Workers are permitted to file lawsuits for unpaid wages, punitive damages, and attorney fees.
• State Enforcement Action – The California Labor Commissioner may issue citations, such as significant fines for misclassifying workers.

Employment Development Department Reporting Requirements

In California, businesses must report independent contractors to the Employment Development Department (EDD). This process is due within 20 days of paying $600 or more in a calendar year or when entering a contract for the same amount or more, whichever occurs first.

Companies may use Form DE 542 (Report of Independent Contractor) and may file online, by mail, or by fax to satisfy the state’s child support enforcement laws. Failure to uphold reporting requirements could result in a penalty of $24 per contractor or $494 if non-reporting was intentional.

Contact a Los Angeles Employment Lawyer Today

To discuss your rights as an independent contractor or find out more about employment misclassifications, contact our office. Call (213) 232-4848 for a free and confidential consultation.

Our attorneys have one goal when we take on your case, and that is to win. If you appreciate a personal touch and high-quality care, you have found the right firm to handle your complex employment or accident case.