California Independent Contractor Agreement
California presumes that a person paid for work is an employee. Under Labor Code section 2775 the hiring business must prove all three parts of the ABC test, and the label in the contract does not decide the question. Since January 1, 2025 a separate statute also requires a written contract and prompt payment for most freelance professional services.
What California law does to this document
The ABC test is the default
A worker is an employee unless the hiring entity shows three things. The worker is free from its control and direction, both under the contract and in fact. The work is outside the usual course of the hiring entity's business. The worker is customarily engaged in an independently established trade or business of the same nature.
Cal. Lab. Code § 2775(b)(1)Exemptions send the question to the older Borello test
The statute carves out a bona fide business-to-business relationship and listed professional services. Each exemption has its own checklist, and the hiring business must prove every item. The business-to-business exemption requires, among other things, a written contract that states the payment amount. Meeting an exemption does not end the inquiry, because it replaces the ABC test with the multi-factor Borello test.
Cal. Lab. Code §§ 2776, 2778Willful misclassification carries civil penalties
Willfully misclassifying a person as an independent contractor is unlawful. The civil penalty is $5,000 to $15,000 for each violation. It rises to $10,000 to $25,000 for each violation where there is a pattern or practice. These penalties are in addition to unpaid wages and other amounts owed.
Cal. Lab. Code § 226.8Freelance Worker Protection Act
For contracts entered into or renewed on or after January 1, 2025, a business that retains a one-person contractor for professional services worth $250 or more must use a written contract. The contract must list the services, the rate and method of pay, and the payment date. Payment is due on the contract date or, if none is stated, within 30 days after the services are completed. The hiring party must keep the contract for four years, and a waiver of the Act is void.
Cal. Bus. & Prof. Code §§ 18100-18107The work-made-for-hire trap
If the parties sign a writing that calls a commissioned work a "work made for hire" and the commissioning party takes all of the copyright, California treats that party as the creator's employer for workers' compensation and unemployment insurance. The generator's option that gives the client all work product uses work-made-for-hire wording with a back-up assignment. In California that wording should be reviewed against these two statutes before signing.
Cal. Lab. Code § 3351.5(c); Cal. Unemp. Ins. Code § 686No non-compete for contractors
A contract that restrains anyone from a lawful profession, trade or business is void to that extent, and the rule is not limited to employees. A contractor who may not work for others also looks less like an independent business under part C of the ABC test.
Cal. Bus. & Prof. Code § 16600Where people go wrong in California
- Relying on the words "independent contractor" in the agreement when section 2775 looks at the relationship in fact.
- Using "work made for hire" language for commissioned creative work without weighing the employer status it triggers under Labor Code section 3351.5(c) and Unemployment Insurance Code section 686.
- Using the generator's draft for a freelancer covered by the Freelance Worker Protection Act without adding the date by which the freelancer must submit a list of services rendered, which Business and Professions Code section 18103(b)(4) requires and the draft does not state.
How the generator works
A work-for-hire consulting agreement that assigns IP, sets payment and SOW terms, and is drafted to support genuine contractor classification under the ABC test. Answer a short interview and the draft assembles as you go, with California already set as the governing state. Download it as PDF or Word. No fee. No account.