Guide to Laws for Freelancers in California

Update January 2020: A new law is now in effect reclassifying many “freelancers” as employees instead. This is AB5, also known as the “gig worker law.” See here for more.

If you are freelancer (there are many other names for essentially the same thing, including “independent contractor,” “contract worker,” “contingent worker,” “consultant,” “gig worker,” “1099 worker,” “subcontractor” or “self employed”), you are essentially your own small business, and generally the law treats you as a business, not as an employee.

In general the employment laws don’t apply to you (unless your “client” is misclassifying you as an independent contractor – see below). But business laws do apply.

But first you must determine whether you qualify as a freelancer (see below).

For even more about freelancer law, see our Guide to Freelancer Law in the U.S.

1. Do I qualify as a freelancer?

I’m not sure if I am a freelancer/independent contractor. How do I know? 

Determining whether you are an independent contractor (aka freelancer) or an employee can be difficult, especially under the new AB 5 law.

See our full write up on Employees vs Independent Contractors.

Is there a different standard for when federal independent contractor laws apply?

Yes. See our Guide to Freelancer Law in the U.S.

2. Employment Law and Freelancers

Does employment law apply to freelancers?

In general, freelancers are considered their own business, rather than an employee. Thus employment law does not apply, including wage and hour laws, family and sick leave, unemployment benefits, workers compensation and disability benefits, and even most anti-discrimination laws. That is, unless a freelancer is “misclassified” and should be an employee under the standards above.

However, there are minor exceptions. In particular, California law says that sexual harassment applies to freelancers.¹CA Govt Code Sec 12940(j)

Instead of employment laws, business laws apply to freelancers.

3. Non Compete

Can my client prevent me from working for a competing company?

In California, a company may not prevent an independent contractor from working for the company’s competitor. The independent contractor has the right to perform work for multiple companies at the same time.

Companies may try to do this through a “non compete” or “non competition” clause in the contract. But these are generally not valid.

However, this does not mean you can use confidential and proprietary information (aka “trade secrets”) you obtained from performing services for one company to your own benefit or for the benefit of another company. A related concept is that a company you perform services for may prohibit you from “soliciting” their clients, through a “non solicit” or “non solicitation” provision. But if the clients contact you on their own, the company can’t prevent this.

4. More Info

Do I need to have an LLC to work as a freelancer?

Legally, it’s not required to have an LLC to be a freelancer. However, many companies require freelancers to have an LLC in order to work with them. It also can be very beneficial to protect a freelancer’s assets and (possibly) save on taxes. See our Guide to Business Structures.

What else do I need to know?

For the following info, see our Guide to Freelancer Law in the U.S.

When do I pay taxes as a freelancer?

Do my clients need to send me any tax forms at all?

Do I need to send any tax forms for freelancers/subcontractors I hire?

What are my intellectual property rights as a freelancer?

Recommendations

• To protect your rights as a freelancer, you should get a good contract drafted by a lawyer to spell out exactly what the terms are when a client hires you.
• It may also be a good idea to form an LLC or corporation to protect your assets and possibly save on taxes.
• Check out Rocket Lawyer²NOTE: Law Soup LLC may receive compensation from Rocket Lawyer if you use any of their services., which provides affordable and simple legal services for business & much more. They are currently offering a 7 day FREE TRIAL!
• Or try to find a good lawyer on your own.

Related Pages

Freelancer Resources

Freelancers vs. Employees

Guide to Contracts

See all Legal Guides