Free California Independent
Contractor Agreement
Specifically drafted for California contractor engagements under AB5 (Labor Code §2775 et seq.). Includes ABC test documentation, worker classification evidence, IP assignment and confidentiality. Governed by California law. No signup required.
- No signup required
- Free forever
- Reviewed June 2026
- AB5 / ABC test compliant
Branding (optional)
1 — Company (Hiring Entity)
2 — Contractor
3 — Services
4 — Payment
PDF: choose "Save as PDF" in the dialog that opens.
Independent Contractor Agreement
State of California · Date: enter date above
1. Parties
Company: Company name
Contractor: Contractor name
2. Services
Project: project name
Deliverables: deliverables
Deadline: project deadline
3. California AB5 Classification
ABC test documentation — all three prongs confirmed in the full agreement
4. Compensation
Fee type: Fixed project fee
Amount: USD ($) amount
Payment schedule: payment schedule
5–9. Standard Clauses
Term & termination · IP assignment · Confidentiality · No benefits / no withholding · Limitation of liability
10. Governing Law
Governed by: State of California, USA.
Company
Signature
Print name: _______________
Title: _______________
Date: _________________
Contractor
Signature
Print name: _______________
Title: _______________
Date: _________________
Template preview
Parties
1. Agreement Parties
This Independent Contractor Agreement ("Agreement") is entered into as of [Date] between [Company Name], [Address] ("Company"), and [Contractor Full Name], [Business Name], [Address] ("Contractor"). This Agreement is governed by the laws of the State of California.
Services
2. Services and Deliverables
The Contractor agrees to provide the following services: [Project Description]. Deliverables: [Specific deliverables, file formats, milestones]. Deadline: [Date]. Services not listed are outside scope. The Contractor may use their own tools, set their own schedule, and perform services at any location unless otherwise agreed in writing.
California AB5 Classification
3. Independent Contractor Status — ABC Test
Under California Labor Code §2775 (AB5), the parties represent and acknowledge that the Contractor satisfies all three prongs of the ABC test:
(A) Control: The Contractor is free from the direction and control of the Company in connection with the performance of the services, both under this Agreement and in fact. The Company may specify the outcome and deadline, but does not direct the methods, tools or schedule.
(B) Outside usual course of business: The Contractor performs work that is outside the usual course of the Company's primary business.
(C) Independently established business: The Contractor is customarily engaged in an independently established trade, occupation or business of the same nature as the services, and may provide services to other clients simultaneously.
Compensation
4. Fees and Payment
Fee type: [Fixed fee / Hourly rate / Monthly retainer]
Amount: [Currency + Amount]
Payment schedule: [e.g. "50% on signing, 50% on delivery" / "Net 14 days from invoice"]
No withholding: The Company will not withhold income taxes or pay employment taxes on the Contractor's behalf. The Contractor is responsible for all self-employment taxes, estimated tax payments and any required California tax filings.
📄 Download the full template — includes IP assignment, confidentiality, no-benefits clause, non-solicitation, limitation of liability and signature block.
Download the full California IC Agreement — free
Fill in your details above and download a ready-to-send agreement with AB5-compliant language.
What's included in this template
How to use this template in California
Verify the Prong B requirement before engaging the contractor
AB5 Prong B — the work is outside the company's usual course of business — is the most commonly failed and litigated prong. A tech company hiring a software engineer almost certainly fails Prong B. A restaurant hiring a plumber for a one-time repair almost certainly passes. The question is whether the contractor's work is central to what the company does. If there is genuine doubt about Prong B, consult a California employment attorney before signing any contract. The contract cannot cure a Prong B failure if the actual work relationship does not satisfy it.
Do not add a non-compete clause — California voids them
California Business and Professions Code §16600 renders non-compete clauses void and unenforceable. Since January 2024 (SB 699), it is unlawful to even include a non-compete in a California contract. This template deliberately excludes non-compete language. If you are adapting a template from another state, remove any non-compete clause. A limited non-solicitation of customers clause may be permissible in narrow circumstances, but broad non-solicitation clauses are increasingly challenged as well.
Maintain the contractor's independence in practice — not just on paper
A California IC agreement documents the parties' intent, but misclassification is determined by the actual working relationship. To maintain Prong A (freedom from control), avoid: setting the contractor's working hours, requiring them to work on-site, providing them with company equipment, requiring them to attend internal meetings as a participant (observer is different), or training them in company methods. These are strong indicia of employment and will undermine your classification regardless of what the contract says.
Get it signed electronically before work begins
California law recognises electronic signatures under the Uniform Electronic Transactions Act (UETA) and the federal E-SIGN Act. There is no requirement for a wet signature. Fill in the form above, download the DOCX or PDF, and use Bonsai to collect a legally binding e-signature — both parties can sign from any device before the first invoice is issued.
Frequently asked questions
- California uses the strictest worker classification test in the US — the ABC test under AB5. Unlike the federal multi-factor test, California presumes all workers are employees unless the hiring entity proves all three ABC prongs. A standard federal IC agreement does not document these California-specific requirements. A California-specific agreement includes explicit ABC test language, classification evidence, no non-compete clause (void under B&P §16600), and governing law as California. Using a generic template in California provides less protection and does not address the specific documentation courts and the EDD look for.
- California's AB5 creates a presumption of employment. To classify a worker as an independent contractor, you must prove all three: (A) the worker is free from your control and direction — you specify the outcome but not how they work; (B) the work is outside the company's usual course of business — this is the hardest prong; and (C) the worker is customarily engaged in an independently established trade of the same nature — they have their own business and serve multiple clients. Failing any one prong means the worker is an employee under California law, regardless of what the contract says.
- AB5 includes over 50 specific occupation exemptions, including licensed professionals (lawyers, doctors, architects, engineers, accountants), real estate licensees, insurance agents, hairstylists, and certain freelance writers and photographers under strict conditions. Exempt professions are evaluated under the older Borello multi-factor test instead of ABC. The business-to-business exemption applies when the contractor meets all 12 specific criteria — including having their own business location, multiple clients, and no restriction from competing. If you believe an exemption may apply to your situation, confirm it with a California employment attorney before relying on it.
- California misclassification penalties are severe. The Labor Commissioner can impose civil penalties of $5,000–$15,000 per violation, rising to $25,000 for willful patterns. The company may owe back payroll taxes plus interest and penalties, retroactive minimum wage and overtime, expense reimbursements, paid sick leave, workers' compensation premiums and PAGA penalties. PAGA (Private Attorneys General Act) allows workers to sue on behalf of the state and collect 25% of penalties — making California misclassification litigation particularly expensive for employers.
- A written agreement is necessary but not sufficient. California courts and the EDD look at the actual working relationship, not just the contract language. A well-drafted agreement documenting the ABC test factors is important evidence — but if the working relationship shows control, exclusivity, or work within the company's core business, the agreement will not prevent reclassification. The contract works best as part of a complete compliance approach: no direction over work methods, no company equipment, contractor serving multiple clients, and work genuinely outside the company's main business.
- No. California Business and Professions Code §16600 voids non-compete clauses. Since January 2024 (SB 699), it is also unlawful to include a non-compete in a California contract — the clause is void regardless of where the contract was signed. A company cannot evade this by choosing a different state's governing law. This template does not include a non-compete clause. A limited non-solicitation of customers may be permissible in narrow circumstances, but broad customer or employee non-solicitation clauses are also increasingly challenged under §16600.
Bonsai handles IC agreements, e-signatures (UETA/E-SIGN compliant), invoicing and automated payments for contractors in any state.