What Are the Penalties for Misclassifying Employees as Independent Contractors in California?

California applies the ABC test under Labor Code § 2775. A worker is presumed to be an employee unless the employer proves all elements of the test.

Misclassification may result in:

• Unpaid overtime and minimum wages
• Meal and rest break premiums
• Payroll taxes
• Workers’ compensation premiums
• Civil penalties
• PAGA representative claims

Intentional misclassification may result in additional statutory penalties. These cases often involve significant financial exposure.