by Vanessa M. Greene, J.D.; Employment Law Counsel, CalChamber
In today’s workplace, employers regularly face decisions about how best to structure their working relationships. Sometimes a company prefers to contract out the work instead of hiring an employee, and many workers value the flexibility that independent contracting can offer. However, labeling a worker an independent contractor does not make them one, regardless of mutual preference or agreement.
And this mistake can be costly for employers. Last July, a company and its three subcontractors were cited more than $2 million for misclassifying 155 janitors as independent contractors — with $1.9 million in wages and penalties payable to the affected workers. Plus, California law makes it clear that companies cannot outsource responsibility for worker protections — employers can be jointly liable with their subcontractors for employee misclassification.
So, it’s important for California employers to understand California’s ABC Test and its exceptions, the lesser used Borello test and California’s Freelance Worker Protection Act.
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January 29, 2026
January 29, 2026