Why a misclassified worker may have no coverage: the Division of Workers' Compensation warns that some employers misclassify workers to avoid workers' compensation and other payroll duties. An employer that treats someone as an independent contractor may buy no coverage for that person or leave the pay out of its payroll reports. The label does not decide status. Labor Code §3351 covers contracts of hire that are express or implied, oral or written, so a signed agreement is not required.

The ABC test: under Labor Code §2775(b)(1), a person who provides labor or services for pay is an employee unless the hiring entity shows all three conditions: - A: the person is free from its control and direction; - B: the work is outside its usual course of business; - C: the person is customarily engaged in an independently established trade of the same nature. Failing any one condition makes the person an employee; the test has no two-out-of-three result. Labor Code §3351(i) applies this test to workers' compensation. Example: a landscaping company pays a worker by the job to mow its customers' lawns. Even if he sets his own hours and owns his equipment, mowing is the company's usual business, so condition B fails and he is an employee.

The employer's liability when an uninsured misclassified worker is hurt: an employer that fails to secure compensation can be sued at law for damages (§3706). In that suit the injury is presumed to result from the employer's negligence, the employer carries the burden of rebutting it, and contributory negligence, assumption of risk and fellow-servant negligence are not defenses (§3708). The worker may also file for compensation with the appeals board (§3715).