In California it is very difficult to determine if a worker is an employee or independent contractor because the IRS and each state agency applies its own set of factors to make the determination. It is therefore possible for one agency to classify a worker as an employee and for another to determine that the same worker is an independent contractor. In addition to the IRS, the state agencies most involved with the determination of whether a worker is an employee vs. independent contractor are the Employment Development Department, Division of Labor Standards and Enforcement, Franchise Tax Board, Division of Workers' Compensation and the Contractor's State Licensing Board.
In light of this, the best defense is to have an understanding of the criteria that each agency uses to make their determination and how to apply it to your business.
Independent Contractor or Employee: Navigating the CA Confusion is meant to provide California employers with an overview of the knowledge they need to have to evaluate and determine the working relationships.