Key Takeaways
Misclassifying a contractor as an employee creates real financial exposure — back taxes, employer FICA, wage claims — not just a paperwork problem.
Three different tests decide the question: the IRS common-law test, state ABC tests (California plus 25+ other states), and the DOL's economic-reality test under the FLSA. They can disagree on identical facts.
The federal DOL test is currently unsettled: the 2024 six-factor rule is still cited in private litigation, but DOL proposed rescinding it in February 2026 for a 2021-style test weighting control more heavily.
Audit triggers are behavioral, not contractual: fixed hours, exclusive availability, company-issued tools and accounts, and integration into core engineering work all read as employee status, whatever the contract says.
