1099 Independent Contractor vs. W-2 Employee Misclassification Checker (ABC Test)
Test whether your employer illegally misclassified you as a 1099 Independent Contractor—and calculate unpaid overtime, 7.65% FICA tax reimbursement, and expense recovery.
1. Enter Your Case Details Runs in your browser
2. Your result Live Output
- Fails Prong B of Strict ABC Test: [Prong B — Core Business] The work I perform is the company's regular core business (e.g., coding for a software firm, driving for a delivery firm) — Under the ABC Test (CA, MA, NJ, IL), if your work is inside the usual course of the hiring entity's business, you are an employee as a matter of law.
- Fails Prong A & IRS Control Test: [Prong A — Behavioral Control] The company dictates my work schedule, required hours, tools, or step-by-step methods — True independent contractors control when and how they complete the deliverable.
- Fails Prong C of ABC Test: [Prong C — No Independent Business] I do not have my own LLC, business license, or advertise services to other clients — Prong C requires that the worker is customarily engaged in an independently established trade or business.
- Economic Reality Employee Indicator: I am paid hourly/weekly on an ongoing basis rather than flat per-project invoices, and cannot hire subcontractors — Ongoing hourly compensation with personal service restriction strongly indicates W-2 employment.
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3. How the rule works
Who this is for
Workers paid on a 1099 who suspect they are really employees, and businesses checking whether a contractor arrangement would survive scrutiny in California or under federal tests.
Classification affects minimum wage, overtime, expense reimbursement, unemployment insurance and taxes, so the stakes are larger than the paycheck.
What to have ready
- Your contractor agreement and any statements of work.
- Examples of instructions, schedules or tools the company controlled.
- Your invoices and 1099 forms.
- Evidence of other clients, a business license or your own business expenses.
The rule
California Labor Code § 2775 codifies the 'ABC test' from Dynamex Operations West v. Superior Court (2018). A worker is an employee unless the hiring business proves all three: (A) the worker is free from its control in performing the work, (B) the work is outside the usual course of its business, and (C) the worker is customarily engaged in an independently established trade or business. Sections 2776 to 2784 exempt many occupations and business-to-business arrangements, which then use the older Borello multi-factor test.
Federal law uses different tests. The IRS looks at behavioral control, financial control and the relationship of the parties. Under the FLSA, courts ask whether the worker is economically dependent on the business, and the Department of Labor's guidance on that test has changed several times since 2021. A worker who believes they were misclassified can ask the IRS to decide with Form SS-8 and report their share of Social Security and Medicare tax on Form 8919.
Read the official text:
Worked example: tax cost of a 1099 label
Jo was paid $60,000 on a 1099 for full-time work that the IRS later agrees was employment.
As self-employed: 92.35% x $60,000 x 15.3% = $8,477.73 self-employment tax As employee (Form 8919): 7.65% x $60,000 = $4,590.00 Difference = about $3,888 (Before the deduction for half of self-employment tax, which narrows the gap slightly.)
Common mistakes
- Relying on the contract's label. Courts and agencies look at how the work is actually done.
- Assuming the ABC test applies to every California job. Many occupations are exempt and use Borello instead.
- Using the California test for federal tax questions. The IRS uses its own factors.
- Forgetting business expenses. California employees are entitled to reimbursement of necessary work expenses under § 2802.
Limits of this tool
- Classification tests vary by state and by law (wage law, tax, unemployment), and a worker can be an employee for one purpose and not another.
- California's exemptions are detailed; the checklist does not test them.
- App-based drivers in California are governed by Proposition 22.
Sources were last checked in October 2026. Statutes are amended often; if the official text differs from this page, the official text controls.
4. Clear Next Steps & Statutory Action Plan
- List how the work is controlled, whether it is the company's core business, and whether you run an independent business.
- Check whether your occupation falls within a California exemption.
- Consider filing Form SS-8 with the IRS or a claim with the state labor agency, and keep invoices, schedules and messages.
5. Frequently Asked Statutory Questions (Cal. Lab. Code § 2775 (AB 5 / Dynamex ABC Test); IRS Common-Law Control Test; DOL FLSA Economic Reality Test)
My contract says I am an independent contractor. Does that settle it?
No. Under § 2775 the hiring business must prove all three ABC prongs, regardless of the contract's wording, unless an exemption applies.
What penalties apply for willful misclassification in California?
Labor Code § 226.8 provides civil penalties of $5,000 to $15,000 per violation, or $10,000 to $25,000 for a pattern or practice, enforced by the Labor Commissioner or in court.
Can I get back the extra tax I paid?
If the IRS treats you as an employee, Form 8919 lets you pay only the employee share of Social Security and Medicare on those wages.