The ABC Test Checker

An educational deep-dive into the strict three-prong test used to determine independent contractor status in jurisdictions like California, Massachusetts, and New Jersey.

Legal Disclaimer

The ABC Test is an "Extractive" test—all three prongs must be met. This tool helps model those prongs but is not a legal certification of status.

ABC Prong Audit Model

(A) Control and Direction

Is the worker free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact?

Yes, fully autonomous methodology

(B) Outside Course of Business

Does the worker perform work that is outside the usual course of the hiring entity's business? (e.g., a plumber fixing a leak at a law firm).

Yes, work is non-core to the business

(C) Independent Occupation

Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed?

Yes, maintains a separate independent business

The ABC Test: A Modern Shield Against Wage Theft

The "ABC Test" is widely considered the strictest standard for worker classification in the United States. Unlike the older Borello standard, which relied on a multi-factor "balancing test," the ABC test is extractive: if an employer fails to prove even one of the three prongs, the worker is legally presumed to be an employee.

This seismic shift in labor law gained national prominence with the California Supreme Court's 2018 ruling in Dynamex Operations West, Inc. v. Superior Court. The court sought to provide a clear, deterministic framework that would prevent companies from shifting their business expenses (like Social Security and equipment) onto workers who were effectively integrated into their core operations.

The Three Prongs: An In-Depth Analysis

Prong A: Freedom from Control

This prong examines both the "Contractual Right" and the "Reality in Fact." An employer must prove they don't have the right to control how the work is performed. If the hiring entity sets the schedule, provides mandatory uniforms, or enforces detailed "Standard Operating Procedures," Prong A is typically failed.

Prong B: The 'Course of Business' Hurdle

*Statistically, most misclassifications fail at Prong B.*

If a tech company hires a software engineer as an "IC," they almost always fail Prong B because coding is the core of their business. However, if that same tech company hires a painter to repaint their office, they pass Prong B because painting is not the usual course of their business. This prong effectively prohibits "staffing" core roles with long-term contractors.

Prong C: The Independent Trade

The worker must have a pre-existing, independently established business. Indicators include having other clients, possessing a business license, advertising their services to the public, and maintaining a separate business location. If the worker only works for you and has no other clients, they likely fail Prong C.

AB 5, AB 2257, and the 'Carve-Out' Era

Following the Dynamex ruling, California codified the ABC test into law via Assembly Bill 5 (AB 5). However, due to significant backlash from specialized industries, AB 2257 was later passed to create dozens of "Exemptions."

Exempt Professionals

  • • Physicians, Lawyers, & Architects
  • • Certified Public Accountants
  • • Direct Salespersons
  • • Commercial Fishermen

B2B Exemption Rules

"Business-to-Business" relationships can sometimes bypass the ABC test if they meet a strict 12-factor criteria, including the requirement that the business service is provided directly to the contracting business, not its customers.

Regional Adoption of the ABC Test

Not all states use the "Full" version of the ABC test. Some only use parts of it for specific purposes like Unemployment Insurance.

JurisdictionStandardPrimary Application
CaliforniaFull ABCWage Orders, UI, Workers' Comp
MassachusettsFull ABCAll employment laws
New JerseyFull ABCUnemployment (ABC Test B is crucial here)
Texas / FloridaCommon LawFederal "Right to Control" model

Critical ABC Test FAQ

Does having a business license (LLC) mean I pass the ABC Test?

No. Having an LLC helps pass Prong C (Independent Occupation), but it does not exempt your relationship from Prong A (Control) or Prong B (Course of Business). If you are a single-member LLC working core hours at a company, you are likely still an employee in ABC states.

Is Prong B 'The Boss' of the test?

Effectively, yes. In California, Prong B is almost impossible to pass if you are performing work that is related to the company's output. This is why "Gig Economy" companies have faced heavy litigation regarding their drivers and couriers.

What happens if I fail the ABC test?

The worker is reclassified as an employee. The employer is then liable for unpaid payroll taxes, overtime, meal and rest break premiums, and potentially massive penalties for "Willful Misclassification."

Does the ABC test apply to Federal Taxes?

No. The IRS still uses its own "Common Law" control test. The ABC test is a state-level creation. It is possible to be an "Employee" for state wage-and-hour purposes but still be an "IC" for federal tax purposes (though this is a very high-risk setup).