California has the strictest worker classification laws in the nation. Whether you're running a gig platform, service business, tech startup, or staffing agency, understanding AB 5, the ABC test, and available exemptions is critical to avoiding misclassification penalties that can reach $25,000+ per violation.
This hub provides industry-specific guidance, interactive classification tools, and practical compliance frameworks for the business models most at risk: gig/on-demand, marketplaces, staffing agencies, home services, construction, and tech contractors.
Worker misclassification in California can result in: (1) Civil penalties $5,000-$25,000 per violation, (2) Back wages + overtime + meal/rest break premiums going back 4 years, (3) Unpaid payroll taxes + penalties, (4) Workers compensation violations (criminal exposure), (5) PAGA claims (hundreds of thousands per case), and (6) Active EDD/DLSE/DIR audits.
Worker is free from control and direction of the hiring entity in connection with performance of work, both under contract and in fact.
Worker performs work outside the usual course of the hiring entity's business. This is the most common failure point for service businesses.
Worker is customarily engaged in an independently established trade, occupation, or business of the same nature as work performed.
Rideshare, delivery, task apps, on-demand labor platforms
Very High RiskTwo-sided platforms, service marketplaces, provider networks
High RiskStaffing firms, managed services, staff augmentation, dev shops
High RiskCleaning, landscaping, HVAC, plumbing, mobile services
High RiskGeneral contractors, subcontractor networks, specialty trades
Medium RiskDev, design, marketing contractors; fractional roles; agencies
Medium RiskSDRs, account executives, commissioned sales reps
Medium RiskCustomer support, call centers, remote ops teams
High RiskAnswer questions about your business model, worker relationships, and control factors to get: (1) ABC test risk scoring, (2) Prong B analysis, (3) Exemption pathways, (4) Recommended compliance path, and (5) Document stack suggestions.
Questionnaire + written memo identifying AB 5 risk factors and exemption pathways
Plain-English conclusion: IC vs employee path + practical compliance steps
California-compliant IC Agreement OR Employment Agreement aligned with recommendation
Call or written follow-up to clarify recommendation and operational next steps