The ongoing battle over independent contractor status has intensified as the gig economy continues to reshape how millions of people work. If you drive for a rideshare app, deliver groceries, or freelance through a digital platform, your classification as an independent contractor may be wrong. Companies often label workers as contractors to cut costs, even when the working relationship looks a lot more like traditional employment.  Contacting a law firm for a case review can help you determine if you are misclassified, and if you need the assistance of an employment law attorney.

How Does Worker Misclassification Occur in the Gig Economy? 

Misclassification typically happens when a company controls significant aspects of how you perform your work but still labels you as an independent contractor. Several common practices signal that a company may be misclassifying its workers:

  • Setting your schedule or requiring specific hours of availability 
  • Dictating how you complete tasks, including what tools or methods to use 
  • Preventing you from working for competitors or other platforms 
  • Providing training on how to perform the job 
  • Setting pay rates with no room for negotiation 
  • Requiring you to wear branded clothing or use company materials

The Impact of Worker Misclassification 

When a company misclassifies you, it shifts financial risk and legal responsibility onto your shoulders. The effects touch nearly every part of your working life and can add up quickly:

  • Loss of overtime pay and minimum wage protections 
  • No access to employer-sponsored health insurance 
  • Exclusion from unemployment benefits if the work ends 
  • No workers’ compensation coverage if you get injured on the job 
  • Responsibility for the full amount of self-employment taxes 
  • Loss of protections under anti-discrimination and family leave laws

What Is the ABC Test? 

Many states use some version of the “ABC test” to determine whether a worker qualifies as an independent contractor or an employee. Under the ABC framework, a worker is presumed to be an employee unless the hiring company can prove all three of the following conditions:

  • (A) Absence of Control: The company does not direct or control how you perform your work, either through a contract or in actual practice. 
  • (B) Beyond Normal Business: The work you perform falls outside the usual course of the company’s business operations. 
  • (C) Customarily Engaged: You independently operate your own established trade, occupation, or business of the same nature as the work you’re performing.

More than 30 states currently apply the ABC test or a close variation of it. However, many limit its use to specific legal contexts, such as unemployment insurance or wage-and-hour disputes, rather than applying it across the board.

Why State Law Claims Matter More Than Ever 

At the federal level, enforcement of independent contractor classification has loosened under the current administration. The U.S. Department of Labor recently announced it will no longer enforce the Biden-era 2024 independent contractor rule in FLSA investigations, proposing the use of a more traditional economic realities framework. That shift makes strong state-level protections more strategically important than ever for misclassified workers. The six states below apply the ABC test as their governing or primary standard for wage-and-hour disputes, giving workers some of the strongest grounds in the country to challenge contractor labels.

Core ABC Wage-and-Hour States 

When it comes to wage-and-hour classification specifically, and not just unemployment insurance, six states stand out for applying the ABC test as their governing or primary standard. California, New Jersey, Massachusetts, Illinois, New Hampshire, and Maine each treat the ABC test as the definitive framework for determining worker status in wage-and-hour disputes. These states offer some of the strongest protections for gig workers in the country.

California 

California codified the ABC test for most Labor Code and wage-order claims under Cal. Lab. Code § 2775 et seq. through AB 5 and AB 2257. The law does include several statutory exemptions for specific professions and industries, and Proposition 22 carved out a separate framework for app-based rideshare and delivery drivers.

Massachusetts 

Massachusetts applies a strict ABC test for wage-and-hour and wage-payment disputes under M.G.L. c. 149, § 148B. The state’s version is among the most worker-friendly in the country, making it difficult for companies to justify independent contractor classifications.

New Jersey 

New Jersey courts extended the ABC test to the state’s Wage Payment Law and Wage and Hour Law following the landmark Hargrove v. Sleepy’s decision. Subsequent rulings reinforced the ABC framework as the standard for wage-related classification disputes, giving workers strong grounds to challenge contractor labels.

Illinois 

Illinois applies an ABC-structure test to wage-and-hour classification through the Employee Classification Act, which was enacted to address misclassification in the construction industry and related trades. Workers in those fields have meaningful grounds to challenge contractor labels under this framework, though the statute does not extend broadly to gig economy workers outside of construction.

Maine 

Maine incorporated ABC-style language into its wage-and-hour employee status provisions through subsequent legislative amendments to its employment statutes. Legal analysis has confirmed the structure operates as an ABC test, placing the burden on employers to prove all three prongs before classifying a worker as a contractor.

New Hampshire 

New Hampshire extended an ABC-style test beyond unemployment insurance and into wage-and-hour classifications in 2008. The law broadened protections for workers by applying the same rigorous framework across multiple areas of employment law.

New York’s Legal Test 

New York does not use the ABC test, but applies a multifactor economic reality test under New York Labor Law and state common law, which examines the overall nature of the working relationship. The state’s approach considers the degree of economic dependence between the worker and the company rather than focusing on any single factor, and New York courts have shown a consistent pattern of finding misclassification more readily than jurisdictions with looser or more employer-friendly standards.

This makes New York a particularly strong state for gig workers challenging their contractor status, and it is a key reason why working with an attorney familiar with New York’s classification test can significantly affect the outcome of a claim.

Consequences of Misclassification 

Companies that misclassify workers face real legal and financial consequences at both the state and federal levels. If a misclassification finding occurs, the fallout can be significant, potentially including:

  • Back payment of wages, overtime, and benefits owed to misclassified workers 
  • Tax penalties and liability for unpaid payroll taxes 
  • Fines imposed by state labor agencies 
  • Exposure to class action and collective action lawsuits 
  • Damage to the company’s public reputation and ability to recruit talent

Contact Working Solutions Law Firm

Our employment lawyers represent workers in NYC, across New York, New Jersey, Massachusetts, and nationwide. We’ve built a track record of delivering results in tough cases and taking on companies others might shy away from. Get in touch today for a case evaluation.  If our firm takes your case, our employment lawyers will fight to recover what you’re rightfully owed.