Whether you're an 'employee' or an 'independent contractor' is the most consequential classification in US gig work. It determines whether you're entitled to minimum wage, overtime, workers' comp, unemployment insurance, and healthcare. California AB5 codified the 'ABC test', which makes employee status the default — then Proposition 22 carved out app-based rideshare and delivery drivers. Before signing any gig contract in the US, understand which classification the platform is asserting and whether it survives the applicable test.
What is a AB5 Classification?
A US gig worker contract is any agreement classifying the worker as an independent contractor, freelancer, or 1099 worker rather than a W-2 employee. Classification is tested under federal law (FLSA 'economic reality' test), IRS rules, and state law — with some states using the stricter 'ABC test' (California, New Jersey, Massachusetts, others). Under the ABC test, a worker is an employee unless: (A) they are free from the hiring entity's control; (B) they perform work outside the hiring entity's usual business; and (C) they are engaged in an independently established business. California AB5 codified the ABC test; Prop 22 then carved out app-based transportation and delivery drivers.
Red flags to watch for
Detailed control over when and how work is performed undermines the 'A' prong of the ABC test. If you can be disciplined for declining jobs, you likely aren't independent.
If you do the same work the platform sells to its customers, 'prong B' of the ABC test usually isn't met — you're probably an employee.
No separate business cards, licence, insurance, or advertising makes it hard to satisfy 'prong C'. Contracts that prevent you from working for competitors also fail.
While enforceable under the FAA for most contract disputes, PAGA claims in California cannot be wholly waived (Adolph v. Uber, 2023).
One-sided indemnities that shift the platform's liability to you are unfair and often unenforceable as adhesive and unconscionable.
Exclusivity clauses are strong evidence of employee status and contradict 'independent contractor' framing.
Prop 22 has specific benefit and disclosure requirements. A contract that ignores them is non-compliant.
Your legal rights
US gig workers' rights depend on whether they are classified as employees or independent contractors. Employee status triggers protections under the Fair Labor Standards Act (29 U.S.C. §§ 201 et seq.), Title VII (42 U.S.C. §§ 2000e et seq.), FMLA (29 U.S.C. §§ 2601 et seq.), OSHA, and state wage-and-hour laws. Contractor misclassification claims can be brought under federal and state law. California specifically codified the ABC test in AB5 (Labor Code § 2775), with narrow statutory exemptions (AB2257) and the Prop 22 carve-out for app-based transportation/delivery (Business and Professions Code § 7451). Other ABC-test states include New Jersey, Massachusetts, Illinois, and (partially) New York, Connecticut. NLRB classification under the Atlanta Opera decision (2023) returned to a multi-factor common-law test.
Questions to ask before you sign
- 1Which state law governs my classification, and does it use the ABC test?
- 2Am I free from the platform's control over how and when I work?
- 3Is the work I do part of the platform's core business?
- 4Do I have an independent business or do I only work for this platform?
- 5If California: does the contract comply with Prop 22's disclosure and benefit rules?
- 6Is there forced arbitration, and does it allow PAGA representative actions?
- 7What happens if I'm misclassified — am I waiving my right to recovery?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.