Sunburned Contracts: The States That Ban Independent Contractor Status

As the gig economy heats up, so do the risks of misclassification. What starts as a flexible “contractor” arrangement can leave you burned—without overtime, benefits, or basic workplace protections. In recent years, several states have enacted laws that severely restrict or outright ban independent contractor status in certain industries. If you work as a driver, delivery person, or in other gig‑style roles, it’s more important than ever to understand where you stand and how to safeguard your rights.

The Rise of Sunburned Contracts: Misclassification Risks

• Mislabeling employees as contractors to avoid payroll taxes, workers’ compensation, and benefits
  
• Loss of minimum wage, overtime pay, unemployment insurance, and family leave protections
  
• Increased exposure to liability and lack of workplace safety net
  
• Difficulty qualifying for unemployment or pandemic‑related relief
  

When an employer calls you an independent contractor but treats you like an employee, you may lose critical legal protections. Misclassification is not just a tax dodge—it can strip away rights to overtime, minimum wage, and unemployment insurance. The IRS warns that employers must apply a facts‑and‑circumstances test to determine worker status; failing to do so can trigger back‑tax liabilities and penalties (IRS: Employee vs. Contractor). Keeping an eye on how your work is structured—control over hours, required training, and provision of equipment—can help you spot red flags before you get burned.

States Taking a Stand: Where Independent Contractors Are Restricted

• California’s AB 5 presumes most workers are employees unless they pass the ABC test (CA Legislature AB 5)
  
• New Jersey’s “ABC test” applied broadly to gig drivers and delivery workers
  
• Massachusetts requiring the “ABC test” for unemployment insurance eligibility
  
• Washington State cracking down on misclassification in construction and home services
  

In response to rampant misclassification, several states have tightened their rules. California’s landmark Assembly Bill 5 shifted the burden onto companies to prove independent contractor status, overturning decades of loose interpretation. New Jersey and Massachusetts have adopted similar “ABC tests” for unemployment and wage‑hour laws, making it far more difficult for employers to treat gig workers as contractors. Washington State has issued administrative rules targeting misclassification in high‑risk industries like construction and home care. A comprehensive map of these evolving laws is maintained by the National Conference of State Legislatures (NCSL Independent Contractor Laws), so you can quickly see where your state stands.

Navigating the ABC Test and State‑Specific Rules

• A: Worker is free from control and direction in the performance of services
  
• B: Work performed is outside the usual course of the employer’s business
  
• C: Worker is engaged in an independently established trade or business
  
• Some states add additional criteria, such as written contracts or business licenses
  
• Exemptions for certain professions—consultants, real estate agents, licensed electricians
  

Most new laws hinge on the “ABC test,” a three‑part standard that’s much stricter than the old multifactor approach. Under this test, you must meet all three prongs to qualify as an independent contractor. For example, California’s rule makes app‑based drivers employees unless they run their own business independently. Other states tweak the test—Massachusetts requires documentation of business operations, while New Jersey adds a fourth factor about the permanency of the relationship. The U.S. Department of Labor provides guidance on these distinctions (DOL Worker Classification), so reviewing both federal and state criteria is essential before signing any contract.

Documenting Your Working Relationship

• Keep signed agreements that clearly define your status, scope of work, and payment terms
  
• Maintain records of invoices, business licenses, and marketing materials showing independent operations
  
• Save communications—emails or texts—that demonstrate control over your schedule and methods
  
• Track multiple clients and project-based work to show economic independence
  

A written contract is your first line of defense—but it’s not enough on its own. Courts and agencies look at actual practices: Do you set your own hours? Do you advertise services to other clients? Can you hire your own assistants? Document every element that supports your contractor status. If you’re audited or file a claim, having a paper trail of invoices, proof of separate business registration, and correspondence showing autonomous decision‑making can tip the scales in your favor.

Partnering with Experienced Employment Lawyers

• Free initial consultation to review your contract and work history
  
• Contingency‑fee arrangements—no fees unless we win
  
• In‑depth knowledge of state and federal misclassification statutes
  
• Proven track record in challenging unlawful contractor designations
  

Misclassification cases often hinge on subtle details that can be difficult to interpret on your own. Gordon Law Group’s attorneys have decades of experience fighting for workers who were wrongfully labeled as contractors. We’ll help you assess whether your engagement meets the strict ABC tests, gather the evidence you need, and pursue claims for unpaid wages, benefits, and damages. With personalized attention and courtroom readiness, we make sure you don’t get left out in the sun.

Gordon Law Group Can Help

If you suspect you’ve been misclassified—or you want to ensure your next contract protects your rights—visit us at gordonllp.com or explore our employment contracts practice. Ready to reclaim your benefits and protections? Contact us today or call (617) 536-1800 for a free consultation. Let our award‑winning team shield you from the heat of unfair contracting practices.