Independent contractor or employee? The tests in every state (1099 vs W-2)

What employees get that independent contractors don’t

Your classification decides which laws protect you. Wisconsin’s labor department lists what a misclassified worker can lose: unemployment benefits, workers’ compensation, the wage and hour laws, civil rights laws and family and medical leave, while paying both the employer’s and the employee’s share of Social Security and Medicare taxes.

• Minimum wage and overtime. The Fair Labor Standards Act protects employees, not independent contractors. See minimum wage and unpaid overtime.29 C.F.R. § 795.110
• Unemployment benefits. State unemployment insurance covers employees. Paid on a 1099? You can still file: the state decides your status, and New York’s labor department says the law may still consider you an employee. See unemployment benefits.NYSDOL guidance
• Workers’ compensation. Injured employees are covered; an independent contractor usually is not, and each state has its own test. See workers’ compensation.Fla. Stat. § 440.02(15)(d) · Wis. Stat. § 102.07(8)
• Half your payroll taxes. An employer pays 6.2% Social Security and 1.45% Medicare tax on your wages and withholds the same from your pay. A contractor pays both halves, 15.3%, as self-employment tax.IRS Topic no. 751
• Leave and discrimination laws. Family and medical leave and the laws against discrimination protect employees. See FMLA leave and filing an EEOC charge.

The federal tests: IRS, Labor Department and NLRB

Three federal agencies decide worker status, each for its own law, and they can disagree about the same job: the IRS test decides your federal taxes, the Labor Department’s decides minimum wage and overtime, and the NLRB’s decides your right to organize.

1. January 7, 2021

   The Labor Department publishes a rule that names two core factors: the nature and degree of control over the work and the opportunity for profit or loss.

2. March 11, 2024

   A new rule takes effect (89 FR 1638) with six economic-reality factors weighed together, 29 C.F.R. § 795.110.

3. May 1, 2025

   Field Assistance Bulletin No. 2025-1: investigators stop applying the 2024 rule’s analysis and enforce under the 2008 Fact Sheet #13 and Opinion Letter FLSA2025-2. The 2024 rule remains in effect for private lawsuits.

4. February 27, 2026

   A proposed rule (91 FR 9932) would rescind the 2024 analysis and return to the 2021 rule with a few changes, also for the FMLA and the farmworker law (MSPA). Comments closed April 28, 2026.

5. October 22, 2026

   No final rule has been published in the Federal Register. Check again before you rely on either version.

The ABC test, part by part

Many states’ unemployment laws, and California’s and New Jersey’s wage laws, use the ABC test. You are an employee unless the company proves all three parts; if it fails any one, you are an employee.

1. 1A: Free from control. You are free from the company’s control and direction in doing the work, under the contract and in fact. California’s labor agency notes that a business need not control the precise manner or details of the work to have the control an employer has.
2. 2B: Outside the usual course of business. The work is outside the company’s usual course of business. In many states it is also enough that the work is done outside all of the company’s places of business. A store that hires a plumber to fix a leak passes; a bakery that hires cake decorators to work on its cakes regularly does not.
3. 3C: Your own independent business. You are customarily engaged in an independently established trade, occupation or business of the same kind, shown by things like incorporation, a license, advertising and other customers. A label the company assigns, or a contract it requires, does not count, and work that relies on a single company is a warning sign.

ABC states for unemployment, from each state’s law or the U.S. Labor Department’s 2023 comparison: Alaska, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, Rhode Island, Vermont, Washington and West Virginia. A and C only (control and your own business): Colorado, Georgia, Idaho, Oregon, South Dakota and Utah; Maine and Wyoming add their own conditions. See the state table for each one.

California applies the ABC test to the Labor Code, the Unemployment Insurance Code and the wage orders since AB 5 took effect on January 1, 2020 (Labor Code §§ 2775-2787, as amended by AB 2257). Some occupations and business-to-business arrangements use the older multi-factor Borello test instead, such as certain licensed insurance agents, physicians and dentists, and people who create or promote sound recordings. App-based rideshare and delivery drivers fall under Business and Professions Code § 7451 (Proposition 22) since December 16, 2020. California overtime itself is explained in California overtime.

Employee or contractor in every state: the unemployment and wage-law tests

Each state’s unemployment test, and its wage-law test where an official source states it, with the law and the source. We read each state’s statute or its labor or unemployment agency on October 22, 2026, and, where the state’s own site refused our requests, the U.S. Department of Labor’s Comparison of State Unemployment Insurance Laws 2023, Chapter 1, Table 1-4, the most recent edition the Department lists. Where the wage-law column says not checked, the federal FLSA test above still applies to minimum wage and overtime in every state.

Workers’ compensation often uses yet another test. Florida asks whether an independent contractor meets at least four of six business criteria, such as a separate business with its own equipment, and Wisconsin requires all nine parts of its test, such as a separate business and a federal employer ID number. Texas’s Workforce Commission applies a 20-factor test (40 T.A.C. § 821.5, effective June 1, 1998) to decide unemployment coverage, and Maine’s criteria require a chance of profit or loss plus at least 3 more. In Maine, an employer that intentionally or knowingly misclassifies an employee can be fined $2,000 to $10,000 per violation. In Colorado, the Division of Labor Standards and Statistics can take a wage complaint from a worker misclassified as a contractor, for unpaid wages of $13,000 or less. Arkansas uses the twenty-factor test of its Empower Independent Contractors Act of 2019, as amended by Act 743 of 2025, both for unemployment and under its minimum wage law.

1099 vs W-2: what each one pays in tax

An employee splits Social Security and Medicare tax with the employer: 6.2% plus 1.45%, 7.65% in all, is withheld from pay, and the employer pays the same again. A contractor pays both halves as self-employment tax: 15.3%, made of 12.4% for Social Security and 2.9% for Medicare, on 92.35% of net earnings, and can deduct half of it from income; wage earners cannot deduct their share. The Social Security part stops at the 2026 wage base of $184,500; Medicare has no limit, and an Additional Medicare Tax of 0.9% applies above a threshold (an employer withholds it on wages over $200,000). You owe self-employment tax if your net earnings are $400 or more (IRS Topic no. 751; Schedule SE (Form 1040)).

Example 1: you earn

$52,000 a yearThe same work, paid on a 1099 or on a W-2.

As a 1099 contractor

$7,347$52,000 × 92.35% = $48,022; × 15.3% = $7,347 in self-employment tax. Half, $3,674, is deductible from income.

As a W-2 employee

$3,978$52,000 × 7.65%. The employer pays another $3,978.

The difference

$3,369 a yearWhat you pay yourself as a contractor. If you were misclassified, Form 8919 limits you to the employee’s share.

Example 2: you earn

$200,000 a yearAbove the 2026 Social Security wage base.

As a 1099 contractor

$28,234$200,000 × 92.35% = $184,700. Social Security: 12.4% × $184,500 = $22,878. Medicare: 2.9% × $184,700 = $5,356.

As a W-2 employee

$14,3396.2% × $184,500 = $11,439, plus 1.45% × $200,000 = $2,900.

The difference

$13,895 a yearEarnings above $184,500 pay only the Medicare part.

How to fix misclassification: claims, forms and deadlines

You do not need the company to agree. Each agency decides your status for its own law, so start with the claim that pays you soonest, and keep the deadlines in view.

1. 1Write down the facts. Who set your hours and location, who trained and supervised you, who supplied tools and paid expenses, whether you could make or lose money, whether you worked for others, and how long the job lasted. Keep messages, schedules, pay records and the contract. The tool at the top of this page asks the same questions.
2. 2Ask the company in writing. A short, polite letter asking to be treated as an employee, or asking for your pay and hours records, creates a dated record. The letter below writes it for you and asks for an answer within 14 days (or 30 days).
3. 3Out of work? File for unemployment. File in the state where you worked, even if you were paid on a 1099; the agency decides whether you were an employee. If you are denied, see unemployment appeal.
4. 4Unpaid minimum wage or overtime? File a wage complaint. Call the U.S. Labor Department’s Wage and Hour Division at 1-866-487-9243 or contact your state labor agency. Under federal law you have 2 years from each missed payment to sue, 3 years if the violation was willful; see the overtime deadlines.
5. 5Ask the IRS for a ruling: Form SS-8. Either the business or the worker may file Form SS-8, and the IRS reviews the facts and officially determines your status for federal employment taxes. It may take at least six months.
6. 6File your return with Form 8919. If you were an employee but the firm did not withhold your Social Security and Medicare tax, Form 8919 figures your share. Reason code A: you filed Form SS-8 and got a determination that you are an employee; C: other IRS correspondence says so; G: you filed Form SS-8 and have no reply yet, or no other code fits and you file Form SS-8 by the date you file your return; H: you got both a W-2 and a 1099 from the same firm for the year.
7. 7Hurt on the job? File a workers’ compensation claim. The state’s workers’ compensation agency decides whether you were an employee. See workers’ compensation.

1. 2 years

   To sue for unpaid federal minimum wage or overtime, counted from each payday (29 U.S.C. § 255(a)).

2. 3 years

   If the violation was willful.

3. At least 6 months

   For the IRS to answer a Form SS-8.

4. With your tax return

   Form 8919; and Form SS-8 by the date you file it, when you use reason code G.

5. Your state’s appeal window

   Unemployment denials have short appeal deadlines; see unemployment appeal.

App, delivery and gig work

Some states have laws written for app-based work. They change the answer under state law; the IRS and federal FLSA tests still apply on their own terms.

• California: Proposition 22. Since December 16, 2020, an app-based rideshare or delivery driver is an independent contractor under Business and Professions Code § 7451 if the network company does not set the driver’s dates, times or minimum hours, does not require accepting specific requests, and meets the section’s other conditions.Cal. Bus. & Prof. Code § 7451
• Florida: marketplace contractors. A marketplace contractor is treated as an independent contractor under state and local law, including unemployment and workers’ compensation, only if the platform meets every condition of the section, starting with not unilaterally prescribing specific hours.Fla. Stat. § 451.02
• Minnesota: rideshare drivers. Transportation network companies must tell drivers in writing about their right to the minimum compensation the law sets.Minn. Stat. §§ 181C.02, 181C.03
• Colorado: rideshare and delivery drivers. Laws passed in 2024 set driver protections and transparency standards for transportation network companies (C.R.S. § 8-4-127, Senate Bill 24-075) and delivery network companies (C.R.S. § 8-4-126, House Bill 24-1129), enforced by the state’s labor standards division.C.R.S. §§ 8-4-126, 8-4-127
• New Jersey. NJDOL’s classification rules, adopted May 5, 2026, apply the ABC test across its unemployment, wage and hour and wage payment laws from October 1, 2026.N.J.A.C. 12:11

What to do next

Getting help

Each of these offices decides worker status for its own law. State offices cited on this page: New Jersey Department of Labor, New York State Department of Labor (fraud hotline 1(866)435-1499), Illinois Department of Labor, Iowa Workforce Development (report online), Wisconsin DWD and Washington ESD (855-829-9243).

Common questions

Official sources

1. IRS: Independent contractor (self-employed) or employee? (the common-law rules, Form SS-8, misclassification), page reviewed Oct 2026 irs.gov
2. IRS: About Form SS-8, Determination of Worker Status irs.gov
3. IRS: About Form 8919, Uncollected Social Security and Medicare Tax on Wages irs.gov
4. IRS Form 8919 (2025): reason codes A, C, G and H (PDF) irs.gov
5. IRS Topic no. 762: Independent contractor vs. employee (file Form SS-8 for a determination) irs.gov
6. IRS: Self-employment tax (15.3%: 12.4% Social Security and 2.9% Medicare; the $400 filing threshold) irs.gov
7. IRS Schedule SE (Form 1040), 2025: net earnings × 92.35%, deduction for one-half of the tax (PDF) irs.gov
8. IRS Topic no. 751: Social Security and Medicare withholding rates (6.2%, 1.45%; 2026 wage base $184,500) irs.gov
9. IRS Publication 15 (2026), What’s New: Social Security wage base limit $184,500 irs.gov
10. 29 C.F.R. § 795.110: the six economic-reality factors (2024 rule, in the CFR as of Oct 20, 2026) ecfr.gov
11. Federal Register, 89 FR 1638 (Jan 10, 2024): FLSA employee or independent contractor final rule, effective March 11, 2024 (PDF) govinfo.gov
12. Federal Register, 91 FR 9932 (Feb 27, 2026): proposed rule to rescind the 2024 analysis; describes Field Assistance Bulletin 2025-1 (May 1, 2025); WHD help line (PDF) govinfo.gov
13. 29 U.S.C. § 255(a): 2 years to sue for unpaid minimum wage or overtime, 3 years if willful govinfo.gov
14. 29 U.S.C. § 152(3): the NLRA’s “employee” excludes independent contractors govinfo.gov
15. NLRB v. United Insurance Co. of America, 390 U.S. 254 (1968): the common-law agency test under the NLRA (Library of Congress, PDF) tile.loc.gov
16. U.S. Department of Labor, Comparison of State Unemployment Insurance Laws 2023, Chapter 1 Coverage, Table 1-4 (the most recent edition DOL lists) (PDF) oui.doleta.gov
17. Alaska Department of Labor: Contract labor and AS 23.20.525(a)(8) (PDF) labor.state.ak.us
18. Arkansas Act 743 of 2025 (SB598), approved Apr 17, 2025: Ark. Code § 11-10-210(e) and the twenty-factor test (PDF) arkleg.state.ar.us
19. Arkansas Department of Labor: rules under the Arkansas Minimum Wage Act, the twenty-factor test of Ark. Code § 11-4-203(3)(E) (PDF) labor.arkansas.gov
20. California Labor Commissioner: Independent contractor versus employee FAQ (AB 5, Labor Code §§ 2775-2787, Borello exemptions, Prop 22) dir.ca.gov
21. California Labor and Workforce Development Agency: the ABC test labor.ca.gov
22. Colorado Department of Labor and Employment: Independent contractors (C.R.S. § 8-70-115) cdle.colorado.gov
23. Colorado Division of Labor Standards and Statistics: claims the Division can investigate (misclassified workers; unpaid wages of $13,000 or less) cdle.colorado.gov
24. Colorado DLSS: Delivery network companies, C.R.S. § 8-4-126 (HB 24-1129, 2024) cdle.colorado.gov
25. Colorado DLSS: Transportation network companies, C.R.S. § 8-4-127 (SB 24-075, 2024) cdle.colorado.gov
26. Connecticut General Statutes, chapter 567, § 31-222 (current) cga.ct.gov
27. D.C. Code § 51-101(2)(A) code.dccouncil.gov
28. D.C. Code § 32-1331.04 (Workplace Fraud Act, D.C. Law 19-300, Apr 27, 2013) code.dccouncil.gov
29. Delaware Code, Title 19, § 3302(14)(K) delcode.delaware.gov
30. Delaware Workplace Fraud Act, 19 Del. C. ch. 35 (construction services) delcode.delaware.gov
31. Florida Statutes § 443.1216 (2026) flsenate.gov
32. Florida Statutes § 451.02 (2026): marketplace contractors flsenate.gov
33. Florida Statutes § 448.110 (2026): Florida Minimum Wage Act flsenate.gov
34. Florida Statutes § 440.02 (2026): workers’ compensation definitions flsenate.gov
35. Georgia Department of Labor: Unemployment insurance tax reporting and liability information for employers (PDF) dol.georgia.gov
36. Hawaii DLIR: Master and servant appeals, HRS § 383-6 labor.hawaii.gov
37. Iowa Administrative Code 871—23.19: employer-employee and independent contractor relationship (PDF) legis.iowa.gov
38. Iowa Workforce Development: Misclassification of workers (report online) workforce.iowa.gov
39. Iowa Code § 91D.1: minimum wage, FLSA definitions (PDF) legis.iowa.gov
40. Illinois Department of Employment Security: Unemployment Insurance Law Handbook (09/2025), 820 ILCS 405/212 (PDF) ides.illinois.gov
41. Illinois Department of Labor: Employer misclassification of workers labor.illinois.gov
42. Indiana Department of Workforce Development: Misclassified worker FAQs, IC 22-4-8-1 (PDF) in.gov
43. Kansas Statutes 44-703(i) ksrevisor.gov
44. Kentucky Revised Statutes 341.050 (effective July 1, 1978) apps.legislature.ky.gov
45. Maryland Code, Labor and Employment § 8-205 mgaleg.maryland.gov
46. Maryland Code, Labor and Employment § 3-902: construction and landscaping services mgaleg.maryland.gov
47. Maryland Code, Labor and Employment § 3-903 (Workplace Fraud Act presumption) mgaleg.maryland.gov
48. Maine Revised Statutes, Title 26, § 1043(11)(E) legislature.maine.gov
49. Maine Revised Statutes, Title 26, § 591-A: employee misclassification fine legislature.maine.gov
50. Minnesota Statutes § 268.035, subd. 15 revisor.mn.gov
51. Minnesota Statutes § 181C.02: rideshare (TNC) driver compensation notice revisor.mn.gov
52. Minnesota Statutes § 181.722 (misclassification; subd. 3) revisor.mn.gov
53. Revised Statutes of Missouri § 288.034.5 revisor.mo.gov
54. Revised Statutes of Missouri § 290.505.4 (overtime, read with the FLSA) revisor.mo.gov
55. Mississippi Department of Employment Security: Mississippi Code Title 71 and regulations (Feb 2024), § 71-5-11(J)(14) (PDF) mdes.ms.gov
56. Montana Code Annotated 2025, § 39-51-204(3) mca.legmt.gov
57. North Carolina Department of Labor: Independent contractor vs. employee (FLSA and Wage and Hour Act) labor.nc.gov
58. North Dakota Century Code § 52-01-01(17)(e) (PDF) ndlegis.gov
59. New Jersey Department of Labor: Independent contractors and misclassification (the ABC test) nj.gov
60. NJDOL press release, May 5, 2026: worker classification rules adopted, operative October 1, 2026 nj.gov
61. Nevada DETR: Employer handbook (Sept 2023), NRS 612.085 (PDF) detr.nv.gov
62. Nevada (DHHS): NRS 608.0155, persons presumed to be independent contractors (PDF) dhs.nv.gov
63. New York State Department of Labor: UI and independent contractors FAQ dol.ny.gov
64. NYSDOL: Worker misclassification, employee vs. independent contractor dol.ny.gov
65. South Carolina Code § 41-27-230 scstatehouse.gov
66. South Dakota Codified Laws 61-1-11 sdlegislature.gov
67. Texas Labor Code § 201.041 tcss.legis.texas.gov
68. Texas Workforce Commission: TWC independent contractor test, 40 T.A.C. § 821.5 (effective June 1, 1998) efte.twc.texas.gov
69. Utah Code § 35A-4-204(3) le.utah.gov
70. Code of Virginia § 60.2-212(C) law.lis.virginia.gov
71. Code of Virginia § 40.1-28.7:7 (presumed employee unless IRS guidelines) law.lis.virginia.gov
72. Vermont Statutes, 21 V.S.A. § 1301(6)(B) legislature.vermont.gov
73. Washington Employment Security Department: Independent contractors (links RCW 50.04.140; 855-829-9243) esd.wa.gov
74. Wisconsin DWD: Worker classification under the labor standards laws dwd.wisconsin.gov
75. Wisconsin DWD: Worker classification, and what misclassified workers lose dwd.wisconsin.gov
76. Wisconsin DWD: Worker classification under the Worker’s Compensation Act (nine-part test) dwd.wisconsin.gov
77. Wyoming Statutes Title 27, § 27-3-104(b) (PDF) wyoleg.gov

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