California AB5 in 2026: Current Status for Freelancers

Last updated: August, 2026. Reviewed by the Jobbers.io editorial team against primary sources, including the California Department of Industrial Relations, the Franchise Tax Board, and official legislative records.

If you’ve done any freelancing in or with California over the past few years, you’ve probably heard someone mention “AB5” the way people mention a storm that never quite finishes passing through. It’s been law since January 2020, it’s been amended, challenged in court, chipped away at, and extended — and in 2026 it’s still the single biggest thing that determines whether you get treated as a business owner or as someone’s employee. This guide walks through where AB5 actually stands right now, who’s exempt, what changed heading into 2026, and what it practically means if you take on client work through a freelance platform.

A quick note before we start: this article is written for general education, not as legal advice. Worker classification rules are detailed, fact-specific, and they do change — sometimes mid-year. Numbers, dates, and statutory citations below were verified against official California and federal sources as of the update date above, but you should confirm anything that affects a real contract or tax filing directly with the California Department of Industrial Relations, the Franchise Tax Board, or a licensed California employment attorney before making a business decision.

What AB5 Actually Is, in Plain English

Assembly Bill 5 didn’t come out of nowhere. In April 2018, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court, a case about a delivery company that had reclassified its drivers as contractors. The court threw out the old, looser standard and replaced it with something much stricter: the “ABC test.” AB5, signed by Governor Newsom in September 2019 and effective January 1, 2020, took that court-made test and wrote it directly into the California Labor Code, the Unemployment Insurance Code, and the state’s wage orders.

A year later, AB2257 came along and rewrote large chunks of AB5 — expanding the list of exempt occupations, loosening the business-to-business rules, and (notably for content freelancers) removing the old cap that had limited exempt freelance writers to 35 submissions per outlet per year. What most people call “AB5” today is really AB5 as amended by AB2257, codified in Labor Code sections 2775 through 2787.

The ABC Test, Explained Without the Legalese

Here’s the part that trips people up: under AB5, every worker in California is presumed to be an employee. It’s on the hiring business to prove otherwise, and it has to win on all three of the following points — not two out of three.

Fail any one of the three and, for the purposes covered by AB5, the worker is legally an employee — regardless of what the contract says, regardless of whether both sides prefer the 1099 arrangement, and regardless of whether the worker was issued a 1099 instead of a W-2. California’s own guidance is blunt about this: labels and paperwork don’t override the test.

Who’s Exempt: The Occupations Carved Out of the ABC Test

AB5 and AB2257 don’t apply the ABC test evenly across every profession. For a long list of occupations, the older, more flexible Borello multi-factor test applies instead — a standard that looks at the whole relationship rather than requiring a clean sweep on three fixed conditions. According to the Department of Industrial Relations’ current guidance, this list includes, among others:

• Freelance writers, translators, editors, copy editors, illustrators, and newspaper cartoonists
• Content contributors, producers, narrators, and cartographers for books, journals, and educational or instructional media
• Marketing, HR administration, and graphic design professional-services contracts
• Still photographers, photojournalists, videographers, and photo editors working for digital content aggregators
• Grant writers, fine artists, enrolled agents, payment processing agents, and data aggregators
• Licensed physicians, dentists, psychologists, veterinarians, attorneys, architects, engineers, and accountants
• Direct salespersons, certain insurance professionals, and registered securities broker-dealers
• Licensed commercial fishers working on an American vessel (exempt through December 31, 2030, under current law)
• Newspaper distributors and carriers (exempt through December 31, 2029)
• Licensed manicurists (exemption reinstated as of January 1, 2026, running through December 31, 2028)

Two things worth flagging. First, several of the “professional services” categories above — including freelance writers, marketers, and graphic designers — only get the Borello test if they also meet a separate set of baseline conditions (things like maintaining their own business location, setting their own rates, and not being restricted to a single client). Second, being exempt from the ABC test doesn’t mean you’re automatically a contractor — it just means the more flexible Borello test decides the question instead. You can still be found to be an employee under Borello if the underlying relationship looks like employment.

The Business-to-Business Exemption: A 13-Point Checklist

If you operate as a sole proprietorship, LLC, partnership, or corporation and you contract with businesses rather than acting like their staff, AB5’s business-to-business exemption may apply instead of a profession-specific carve-out. Under the current DIR guidance, a hiring business has to be able to check off all of the following to use it:

1. You’re a sole proprietor or formal business entity (LLC, partnership, LLP, or corporation)
2. You’re free from the hiring company’s control and direction, in contract and in practice
3. You provide services directly to the hiring business rather than to its customers
4. You have a written contract specifying payment amount and due date
5. You hold any required business license or tax registration
6. You maintain a business location separate from the hiring company’s (your home office counts)
7. You’re customarily engaged in an independently established business of the same kind
8. You can contract with other businesses and keep your own clientele without restriction
9. You advertise and hold yourself out to the public as available for this work
10. You supply your own tools, vehicles, and equipment for the work
11. You can negotiate your own rates
12. You can set your own hours and location of work
13. You’re not doing work that requires a Contractors State License Board license

This is a genuinely detailed checklist, and it’s worth sitting with rather than skimming — missing even one item can be enough to knock a working relationship out of the exemption. The full statutory language is publicly available on the DIR’s independent contractor FAQ page, and it’s genuinely worth reading in full if your income depends on getting the answer right.

The Referral Agency Exemption — Relevant If You Take Client Leads Through a Platform

There’s a separate carve-out for services provided through a referral agency: graphic design, web design, photography, tutoring, consulting, event planning, minor home repair, moving, dog walking, pool cleaning, and several other categories. It excludes higher-risk industries like janitorial, delivery, trucking, agricultural labor, retail, and general construction. The exemption hinges on the agency not controlling how the service provider does the work, and on the service provider — not the agency — setting their own rates and negotiating directly with the client.

That last detail matters more than it might look at first glance, because it’s exactly the kind of factor that shows up again and again across AB5’s tests: control over rates and terms of payment. A platform that dictates pricing and takes a transaction cut looks structurally different, in the eyes of the ABC and Borello tests, from one where the freelancer and client agree on payment terms themselves.

What About Rideshare and Delivery Drivers?

App-based rideshare and delivery drivers sit outside most of what’s discussed above. They’re covered by a separate carve-out written into California’s Business and Professions Code (Section 7451) through Proposition 22, the 2020 ballot initiative that passed with roughly 58.6% of the vote. Prop 22 lets network companies classify drivers as independent contractors as long as the company doesn’t dictate specific shifts, force acceptance of specific ride or delivery requests, or block drivers from working other jobs.

Prop 22 survived a years-long constitutional challenge. In Castellanos v. State of California, decided July 25, 2024, the California Supreme Court unanimously upheld it, ruling that voters have the constitutional authority to legislate on workers’ compensation matters through the initiative process. That decision is now over a year old and remains the controlling law heading into 2026 — but it applies specifically to app-based transportation and delivery drivers, not to freelancers more broadly, so it’s a common point of confusion worth clearing up.

What’s Actually New in 2026

A few concrete, dated changes are worth knowing if you’re trying to stay current rather than working off outdated blog posts:

• AB 1514, signed by Governor Newsom on October 3, 2025 (Chapter 305, Statutes of 2025), reinstated the licensed-manicurist exemption — which had lapsed on January 1, 2025 — through January 1, 2029, and extended the commercial-fisher exemption through January 1, 2031. It also added new state reporting requirements on misclassification allegations in the manicurist industry.
• California’s minimum wage rose to $16.90 per hour statewide effective January 1, 2026, with the minimum annual salary for exempt employees rising to $70,304. This only matters to a freelancer indirectly, but it’s a useful reminder of exactly what’s at stake in a classification dispute: minimum wage, overtime, and related protections apply to employees, not to independent contractors.
• At the federal level, the U.S. Department of Labor published a proposed rule on February 26, 2026, that would rescind the 2024 federal independent-contractor test and replace it with a version closer to the 2021 “economic reality” standard, built around two core factors: control and opportunity for profit or loss. This matters for federal wage-and-hour law (the FLSA), but it does not change California’s ABC test — the two systems are separate, and California’s is generally the stricter of the two. A worker can be a contractor under a looser federal standard and still be an employee under AB5.

Enforcement Isn’t Theoretical — A 2025 Case in Point

It’s easy to treat classification rules as background noise until an actual number shows up attached to them. On October 30, 2025, the California Labor Commissioner’s Office cited Costco Wholesale Corporation, Ryder Last Mile Inc., and Mega Nice Trucking LLC a combined $868,128 for misclassifying 58 delivery drivers, following an investigation by the agency’s Bureau of Field Enforcement. Investigators found that Costco and Ryder Last Mile scheduled deliveries, mandated uniforms, and closely monitored driver performance — the kind of day-to-day control that fails Prong A of the ABC test even where a subcontractor sits in between the driver and the two larger companies. It was reportedly the first AB5-linked enforcement action of its kind against the trucking sector, and roughly three-quarters of the penalty was earmarked to go directly to the affected workers.

Beyond individual enforcement actions, the statutory penalties for willful misclassification are specific and worth knowing: Labor Code section 226.8 authorizes civil penalties of $5,000 to $25,000 per violation for willfully misclassifying a worker, and the Employment Development Department can add a further penalty equal to 15% of any resulting tax deficiency if the misclassification is found to be negligent or intentional. None of that is aimed at freelancers themselves — the liability falls on the hiring business — but it explains why serious California clients tend to be careful about how they structure contractor relationships, and why the paperwork you’re asked to sign is rarely just a formality.

What This Means If You Freelance Through a Platform

None of this is abstract if your income depends on getting classified correctly. A few things consistently show up across the ABC test, the Borello factors, and the B2B exemption checklist: whether you set your own rates, whether you can turn down work, whether you serve more than one client, and whether the payment relationship runs directly between you and the client rather than being dictated by a middleman.

This is one of the reasons freelancers doing California-connected work pay attention to how a platform is structured, not just what it charges. jobbers.io is built as a commission-free marketplace — it doesn’t take a cut of what you earn, and freelancers and clients discuss and agree on payment terms directly with each other rather than having rates set for them. That structure lines up with several of the independence factors regulators look at (negotiating your own rates, controlling your own terms of payment), though it’s worth being clear-eyed that no platform’s business model, on its own, can guarantee a particular classification outcome — the full picture of how you actually work with each client still matters. If you’re browsing freelance jobs and want to keep your independent-contractor footing solid, a few habits help regardless of which platform you use:

• Work with more than one client where possible, rather than depending on a single company for all your income
• Keep a written contract for every engagement, specifying scope, rate, and payment terms
• Set and negotiate your own rates instead of accepting a fixed rate card imposed by the hiring party
• Maintain your own tools, software licenses, and workspace
• Market yourself publicly as available for the work — a website, portfolio, or public profile helps establish Prong C and the B2B “holds itself out to the public” factor
• Avoid agreeing to fixed hours or exclusive availability unless that’s genuinely how you want to work

Verify Before You Rely on This

California’s independent-contractor rules run through statute, regulation, ballot initiative, and case law simultaneously, and each of those can move independently of the others. Everything above was cross-checked against the Department of Industrial Relations, the Franchise Tax Board, official bill text on the California Legislature’s site, and the U.S. Department of Labor as of the date at the top of this article — but for anything with real money or a real contract riding on it, verify the current numbers and requirements yourself, or speak with a licensed California employment attorney or tax professional. Laws in this area are amended almost every legislative session, and a detail that’s accurate in August 2026 is not guaranteed to stay accurate indefinitely.

Sources & Further Reading

• California DIR — Independent Contractor vs. Employee FAQ
• California Franchise Tax Board — Worker Classification and AB 5 FAQ
• Official AB5 Bill Text — California Legislative Information
• Official AB 1514 Bill Text — California Legislative Information
• Castellanos v. State of California (2024) — Case Summary, Justia
• DIR News Release — Costco/Ryder Last Mile/Mega Nice Trucking Citation
• U.S. Department of Labor — 2026 Independent Contractor Rulemaking
• California Labor & Workforce Development Agency — Employment Status Portal

Frequently Asked Questions

Does AB5 apply to freelancers whose clients are outside California?

AB5 applies based on where the work is performed, not where the client is based. If you’re physically working in California, California’s classification rules generally apply to that work even if every client you serve is based elsewhere. If you live and work outside California, AB5 generally does not apply to you, though the client’s own state may have its own classification rules.

Are freelance writers, editors, and translators exempt from the ABC test?

Freelance writers, translators, editors, copy editors, illustrators, and several related content-creation roles fall under the professional-services carve-out, which uses the Borello test instead of the ABC test — provided the additional baseline conditions for that category are also met. This isn’t a blanket exemption from misclassification risk; it just means a different, more flexible legal test applies.

What is the ABC test, in one sentence?

It’s a three-part legal test that presumes every worker is an employee unless the hiring business proves the worker is free from its control, does work outside its usual business, and independently runs their own trade or business doing that kind of work — and the hiring business has to win on all three points, not just some of them.

Do I need a written contract to be treated as an independent contractor under AB5?

A written contract isn’t legally required for every exemption, but it’s explicitly required for the business-to-business exemption, and it’s one of the strongest pieces of practical evidence across nearly every test California uses. It’s good practice regardless of which exemption might apply to you.

What happened with Prop 22 and app-based drivers?

The California Supreme Court unanimously upheld Proposition 22 as constitutional in Castellanos v. State of California on July 25, 2024. App-based rideshare and delivery drivers remain classified as independent contractors under that separate carve-out, distinct from the exemptions that apply to most other freelancers.

What actually changed under AB5 for 2026?

The most significant dated change is AB 1514, signed October 3, 2025, which reinstated the licensed-manicurist exemption (through January 1, 2029) and extended the commercial-fisher exemption (through January 1, 2031). Separately, a federal DOL proposal published in February 2026 would loosen the federal independent-contractor standard, but it does not change California’s state-level ABC test.

What happens if a client or platform misclassifies me?

You can file a wage claim or a report of a labor law violation with the California Labor Commissioner’s Office, or file a lawsuit. Misclassifying businesses can face restitution, back taxes, and civil penalties of $5,000 to $25,000 per willful violation under Labor Code section 226.8, plus additional EDD penalties in cases involving negligent or intentional tax reporting violations.

Does using a freelance marketplace affect my classification under AB5?

How a platform is structured can be one relevant factor among many — for example, whether you set your own rates and negotiate payment terms directly with clients, rather than having a fixed rate imposed on you, touches on factors regulators look at under both the ABC and B2B tests. It isn’t a determining factor on its own; the full working relationship with each individual client still governs the legal outcome.