What Is the ABC Test?

To classify a worker as an independent contractor, the employer must prove all three of the following:

A. The worker is free from control and direction in performing the work.

B. The work performed is outside the usual course of the hiring entity’s business.

C. The worker is customarily engaged in an independently established trade or business.

Failing any one of these prongs typically results in the worker being deemed an employee.

Workers’ Comp Audit Readiness Checklist

Use this checklist to prepare for a potential WC audit:

• Review all 1099 contractors and their roles
• Document how each contractor meets the ABC test
• Maintain up-to-date contracts and scopes of work
• Ensure contractors carry their own WC or liability insurance
• Track payments and hours worked for all non-W-2 labor
• Consult legal counsel for gray-area roles

Staying proactive can help avoid costly reclassification penalties and retroactive premium assessments.

In this issue:

This Just In ... WCIRB Report: California Workers’ Comp Losses Exceed Premiums in 2024

WCIRB 2025 Annual Conference: Key Takeaways for California Workers’ Comp Stakeholders

Mid-Year Check-In: IRMI’s 2025 Workers’ Comp Watchlist Highlights Key Shifts

Worker Classification in the Gig Economy: What Employers Need to Know in 2025

What Is the ABC Test?

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