Federal and state laws use different tests to classify workers as employees vs. independent contractors. The classification determines whether the worker gets minimum-wage, overtime, unemployment, workers' comp, employer payroll-tax contributions, and the right to organize.
Key recent battles:
- California AB5 / Prop 22: AB5 codified a strict "ABC" test, classifying most gig workers as employees; Prop 22 (2020 ballot, narrowly upheld in court) carved out app-based drivers as independent contractors with limited benefits.
- PRO Act / federal action: Would adopt the ABC test federally.
- Department of Labor rule: Has shifted between administrations.
- "Third category" proposals: A new classification with portable benefits, partial protections, and preserved flexibility.