The misclassification question shows up in personal injury work more often than the employment bar admits. A delivery driver runs a red light in a company-branded van and respondeat superior is a straight line; the same driver, labeled a contractor on a 1099, and the defense files a demurrer the morning after service. Whether the worker is an employee or an independent contractor decides who pays, what insurance answers, and whether you can reach the hiring entity's assets at all.
Six years into AB 5, the doctrine has settled into a recognizable shape but the litigation is anything but quiet. The California Supreme Court has now blessed Proposition 22, the Ninth Circuit is sitting on equal-protection challenges, and trial courts are still working out how the ABC test interacts with negligent hiring, non-delegable duties, and workers' compensation exclusivity. What follows is the working posture for plaintiff PI counsel in 2026.
The Statutory Posture After AB 5 and AB 2257
Labor Code section 2775, codifying the holding in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, makes the ABC test the default for wage-order, Labor Code, and Unemployment Insurance Code purposes. The hiring entity carries the burden on all three prongs: (A) the worker is free from the hirer's control and direction in fact and under the contract; (B) the worker performs work outside the usual course of the hirer's business; and (C) the worker is customarily engaged in an independently established trade of the same nature as the work performed.
AB 2257 added sections 2776 through 2784, carving out occupations and contractual relationships that revert to the multifactor test of S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. The exempt list runs long — licensed professionals, business-to-business contractors that meet a twelve-factor checklist, certain referral agencies, freelance writers and photographers subject to volume limits, real estate licensees, repossession agents, and others. Each exemption has its own conditions, and the defendant who claims one carries the burden of establishing every element.
The retroactivity question, resolved in Vazquez v. Jan-Pro Franchising International, Inc. (2021) 10 Cal.5th 944, applies Dynamex backwards in time. For PI cases with claims that long-predate AB 5, that matters whenever the wage-order definition of employment carries into negligence-based theories of vicarious liability.
How the ABC Test Actually Runs in PI Cases
Prong B does most of the work. A trucking company that books loads, dispatches drivers, and bills shippers cannot credibly say its drivers perform work outside the usual course of trucking. A construction GC cannot say the same of the framer who shows up at every project. The "usual course of business" inquiry is comparative and functional — if the worker's labor is the product the hiring entity sells, prong B fails and the analysis stops.
Prong A overlaps substantially with the Borello right-to-control factor but is narrower. The contract language matters but does not control; courts look at scheduling, equipment, supervision, the right to discharge, and the practical integration of the worker into the hirer's operations.
Prong C is the one defendants most often think they have won and most often have not. A worker is not "independently established" merely because the hiring entity put them on a 1099 and required a business license. The inquiry asks whether the worker has, separate and apart from this one engagement, a going concern — other clients, marketing presence, business assets, the indicia of someone in business for themselves before this defendant called.
Proposition 22 and the Castellanos Aftermath
For app-based ride-hail and delivery drivers, the ABC test is off the table. The California Supreme Court's 2024 decision in Castellanos v. State of California upheld Proposition 22 against a single-subject and constitutional-amendment challenge, leaving Business and Professions Code section 7448 et seq. in force. Drivers for the named platforms are independent contractors as a matter of law, with a statutory floor of earnings, healthcare contributions, and occupational accident insurance — and no presumption of employment.
That does not end PI exposure for the platforms. As recent MDL rulings on rideshare non-delegable duty have made plain, classification answers respondeat superior but does not foreclose direct-negligence theories, negligent retention, or the argument that a duty owed to the passenger or pedestrian cannot be assigned to a contractor as a matter of law. The Ninth Circuit's Olson v. State of California equal-protection challenge remains an open thread; a federal ruling against Prop 22 would reopen the classification question for platforms, though most observers expect the statute to survive.
Borello Still Lives for Exempt Occupations
When the defense establishes an exemption under sections 2776 through 2784, the inquiry reverts to Borello's multifactor test. The right to control the manner and means of work remains primary, with secondary factors that include the right to discharge at will, whether the worker supplies tools and the place of work, the length of service, the method of payment, whether the work is part of the regular business of the hiring entity, and the parties' belief about the nature of the relationship.
For plaintiff counsel, the practical point is that Borello is not a defense victory — it is a different test. Many cases that fail prong B of the ABC test also fail Borello's "regular business" factor. The defendant who pleads an exemption has only moved the battle, not won it.
Pleading Around Misclassification
The cleanest path is to plead in the alternative. Count one alleges the tortfeasor was an employee acting within the course and scope, supporting respondeat superior. Count two alleges that even if the tortfeasor is an independent contractor, the hiring entity is liable under the non-delegable-duty doctrine, negligent hiring and retention, the peculiar-risk doctrine where applicable, or its own direct negligence in supervision, training, or vehicle maintenance.
Watch for the workers'-compensation exclusivity trap. If the injured plaintiff was themselves working at the time and is later determined to have been the hiring entity's employee, Labor Code section 3602 may bar the civil action entirely. Plaintiff counsel who reflexively argue employment status for the tortfeasor should make sure that argument does not boomerang onto a co-worker plaintiff.
The 2024 PAGA reforms, enacted through AB 2288 and SB 92, recalibrated representative-action penalties but did not touch the underlying classification doctrine. Misclassification remains a Labor Code violation in its own right, and the records produced in a PAGA-adjacent investigation — driver logs, training materials, contractor agreements, route assignments — are frequently the same records a PI plaintiff needs to prove control and integration.
What Defense Counsel Is Doing in 2026
Three patterns recur. First, defendants are repapering relationships under the section 2776 business-to-business exemption, which requires the contractor to be a bona fide business entity providing services directly to another business. The twelve conditions are conjunctive, and several — that the contractor advertise to the public, maintain a separate business location, set its own rates — are difficult to satisfy for genuine misclassifications dressed up after the fact.
Second, defendants are pushing arbitration clauses with class and PAGA waivers and Federal Arbitration Act preemption arguments. For straight personal injury claims by third parties, those clauses generally do not reach; the injured pedestrian never signed anything. For dual-role plaintiffs — the injured worker who is also the contractor — the arbitration question can become outcome-determinative.
Third, expect indemnity tenders. Many contractor agreements impose broad defense-and-indemnity obligations on the worker in favor of the hiring entity. Those clauses may be voidable as against public policy under Civil Code section 2782 in the construction context, or as unconscionable in the gig context, and they are worth scrutinizing the moment a tender lands.
Adjacent Doctrine to Keep in View
Misclassification interacts with fee-agreement compliance — see the 2026 update on Business and Professions Code section 6147 — because mixed wage-and-hour and PI matters often require disclosure of the alternate fee structure on the employment component. It also interacts with the non-delegable-duty line of cases working through the appellate courts, where the classification question is sometimes mooted entirely by a finding that the duty owed to the public could not have been delegated regardless of who held the W-2.
The throughline for 2026: misclassification is no longer the novel argument it was in 2019. Trial courts are comfortable with the ABC test, the defense bar is comfortable claiming exemptions, and appellate guidance keeps narrowing the open questions. Plaintiff counsel who frame the case around control, integration, and the comparative usual-course inquiry of prong B — and who plead direct-negligence theories in the alternative — are in the strongest posture, regardless of how the classification debate ultimately resolves on the facts.