The ABC test is used in some states to determine whether a person is an employee or an independent contractor for the purpose of determining state unemployment tax. Some courts using this test look at whether a worker meets three separate criteria to be considered an in…
Understanding ABC test
• The worker is free from the employer's control or direction in performing the work.
• The work takes place outside the usual course of the business of the company and off the site of the business.
• Customarily, the worker is engaged in an independent trade, occupation, profession, or business.
Some states, such as California, require a person to meet each criterion to be considered an independent contractor. Each factor is detailed in the 2018 California case Dynamex Operations W. v. Superior Court. In the first prong, the court emphasized that the worker needs to set their own schedule and work without supervision. Merely working at home is not enough to satisfy the first prong—especially if a company provides materials or specific instructions for the worker to meet.
In the second prong, it is explained that contracted workers who provide comparable services to existing employees are generally viewed as working in the usual course of the hiring entity’s business.
In the third prong, the hiring entity must prove that the independent business operation exists at the time the work is performed.
How ABC test affects you
ABC test appears in U.S. legal practice across multiple practice areas. Knowing what it means — and when it applies — can determine the outcome of motions, filings, and negotiations. For non-lawyers, the value of looking up a precise definition is that legal terms often carry meanings that differ from everyday usage; relying on the common meaning can lead to costly missteps.
The mechanics of ABC test
In practice, ABC test is invoked when parties, judges, or attorneys need to identify the legal status of an issue, the rights of those involved, or the procedural step required next. The definition shown above is sourced from Cornell LII Wex , which is widely cited in U.S. legal practice. Because U.S. law is jurisdictionally layered — federal, state, and sometimes local — the precise application of the term can vary by court, so check the controlling authority for your specific case.