The short answer? Yes, but you better be sure they qualify.
Thanks to California’s strict worker classification laws, many companies are realizing a tough truth: just because someone wants to be a 1099 doesn’t mean you can legally pay them that way.
This post breaks down what the law really says, what risk you’re actually carrying, and how to keep moving without freezing up every time someone says “independent contractor.”
You’ve probably heard of the ABC test — California’s way of deciding who’s a contractor and who must be a W-2 employee.
To use a 1099 in California, all three of these must be true:
A – They’re free from your control (you can’t manage how they work)
B – They’re doing work that’s not part of your core business
C – They run an independent business doing the same kind of work
If they fail any one of those, they’re considered a W-2 — and misclassifying them can get expensive, fast.
Nope. The law doesn’t care if they’re asking to be 1099. In California, it’s not about preference — it’s about whether the facts line up with the ABC test.
If you’re paying someone regularly, giving them direction, or depending on them to deliver part of your core service? You’re probably on the hook for a W-2 relationship.
$5,000–$25,000+ in penalties per violation
Back taxes, unpaid benefits, and retroactive payroll obligations
Wage and hour violations (like missed meal and rest breaks)
Individual lawsuits — even if you had a signed contractor agreement
Class actions for failing to provide benefits, sick leave, health coverage, advancement opportunities, or raises
Even well-meaning companies get burned for not slowing down to check the setup. California doesn’t care if it was accidental — they care if it’s compliant.
Absolutely. But it has to be done right.
Here’s when using a 1099 usually works in California:
You’re hiring a specialist for a specific project (e.g., marketing copywriter, freelance designer)
Their work is clearly outside your day-to-day business
They have other clients, their own business entity, and control over their schedule
You’re not giving them login credentials, email addresses, or managing them like a team member
Still not sure? That’s where we come in.
Great question — and no, it doesn’t.
Where you find them doesn’t matter. Even if they’re listed as a freelancer on Upwork, if you control the work, they’re doing core business activities, and they’re not truly independent? You’re still at risk.
Platforms like Upwork give the illusion of safety — but they don’t protect you if a misclassification claim is made. You’re still responsible.
Here’s what we do for clients every day:
Review each 1099 engagement with the hiring manager and candidate
Evaluate the relationship using the ABC test and other federal and state standards
Give you a clear recommendation — and a documented decision trail
If needed, we’ll convert them to a W-2 through our EOR platform (without disrupting your business)
You could — but you’re building a pile of risk that grows with every pay period.
The better approach? Get ahead of it.
There’s no harm in reviewing the setup now. If they qualify, great — you’ve got peace of mind. If they don’t, we’ll help you pivot before you’re dealing with backpay, penalties, or an angry contractor with a lawyer.
The days of “handshake contractor agreements” are over — especially in California.
But that doesn’t mean you can’t build flexible, agile teams. It just means you need to work with the right partners who know how to evaluate, document, and protect both sides of the relationship.
If you’re unsure about a 1099 setup, or just want a second look — we’ll run a compliance review, fast and free.