Most nurses cannot legally work as independent contractors in California. The state’s default worker classification test makes it nearly impossible for a registered nurse or licensed vocational nurse providing patient care at a hospital, clinic, or skilled nursing facility to qualify. A narrow path exists for certain advanced practice roles, including nurse practitioners, certified registered nurse anesthetists, and certified nurse midwives, who may qualify under a professional services exemption evaluated by a more flexible standard.
Why Standard Nursing Roles Don’t Qualify
California classifies workers using the ABC test, codified at Labor Code Section 2775. Every worker is presumed to be an employee unless the hiring entity can prove all three of the following:1California Labor and Workforce Development Agency. ABC Test
- The worker is free from the hiring entity’s control in how the work is performed.
- The work falls outside the hiring entity’s usual course of business.
- The worker is already established in an independent trade or business of the same type as the work being performed.
The second prong is the wall. Hospitals, clinics, and skilled nursing facilities exist to deliver medical care, and bedside nursing is the exact work those facilities were built to do. There is no credible argument that nursing falls outside the usual course of a healthcare facility’s business. Carrying your own malpractice policy, forming an LLC, or picking up shifts across several facilities does not fix the problem, because the test requires all three prongs to be satisfied.
Facilities that classify staff RNs or LVNs as contractors face real exposure. California treats willful misclassification as a separate violation carrying civil penalties of $5,000 to $15,000 per worker, with higher penalties for a pattern of violations.2California Legislative Information. California Labor Code LAB 226.8 The facility also becomes liable for unpaid overtime, meal and rest break violations, unemployment insurance taxes, and workers’ compensation premiums for the entire misclassified period.3California Department of Industrial Relations. Independent Contractor Versus Employee – Section: 10
Which Nurses Can Be Contractors
Labor Code Section 2778 carves out certain advanced practice roles from the ABC test. Nurse practitioners, certified registered nurse anesthetists, and certified nurse midwives are among the professions eligible for what the statute calls the professional services exemption.4California Legislative Information. California Labor Code LAB 2778 If one of these practitioners meets every requirement of the exemption, their classification is evaluated under the older Borello multi-factor test instead.
The difference matters. The ABC test’s second prong disqualifies anyone whose work is central to the hiring entity’s business, and that bright line is what shuts out standard nursing. Borello has no such rule. It weighs the overall working relationship, which gives advanced practitioners who genuinely run their own practices a realistic path.
The Six Conditions You Must Meet First
Holding an advanced practice license is not enough. Before Borello even applies, you must satisfy six conditions laid out in Labor Code Section 2778(a). Failing any one sends you back to the ABC test, which effectively means employee status.5California Employment Development Department. Contracts for Professional Services (DE 231PF)
- A separate business location distinct from the hiring facility. Your home qualifies. You can still perform the clinical work at the facility.
- A local business license or business tax certificate if your city or county requires one, in addition to your nursing license.
- The ability to set or negotiate your own rates, rather than accepting a facility’s take-it-or-leave-it number.
- Control over your own schedule, outside of project deadlines and reasonable business hours.
- Either performing the same type of work for other hiring entities or holding yourself out to the public as available for it. Exclusive single-facility arrangements undermine this.
- Regular exercise of discretion and independent clinical judgment in your work.
A written contract spelling out your rate of pay and the expected duration of services is standard practice and strengthens your position if your status is ever challenged. You should also carry your own professional liability insurance. Coverage of $1 million to $3 million is typical for advanced practice nurses working independently, and occurrence-based policies are generally preferable because they cover incidents that happen during the policy period regardless of when the claim is filed.
How Borello Evaluates Your Status
Once the six conditions are met, your status is determined under the Borello test, used by California courts since the 1989 decision in S.G. Borello & Sons v. Department of Industrial Relations. The central question is whether the hiring entity has the right to control how you perform your work, not just the result you deliver.6California Department of Industrial Relations. Independent Contractor Versus Employee
Beyond that primary factor, the test weighs several secondary considerations:
- Whether you hold yourself out as operating a distinct business
- Whether the work is a regular, integrated part of the hiring entity’s operations
- Who supplies the tools, equipment, and workspace
- Whether you’ve invested your own money in the business
- Whether the work requires specialized skill
- Whether you work under direct supervision or independently
- Your opportunity for profit or loss based on your own decisions
No single factor decides the question. A nurse anesthetist who brings their own equipment, maintains contracts with multiple facilities, invoices for services, and makes independent clinical decisions looks far more like a contractor than one who works exclusively at a single hospital on a fixed schedule using the hospital’s supplies.
Working Through a Staffing Registry or Referral Agency
Nurses who find shifts through registries or referral agencies fall under Labor Code Section 2777, which has its own rules. The ABC test does not automatically govern the relationship between the agency and the service provider. If the agency can show that specified conditions are met, Borello applies instead.7California Legislative Information. California Labor Code LAB 2777
Those conditions include that you are free from the agency’s control over how you perform the work, that you have the required business and professional licenses, that you deliver services under your own name, and that you can negotiate rates and work for multiple clients. The agency also cannot restrict you from working with competing agencies or directly with facilities.
Even when the agency relationship is structured correctly, the Prong B problem still exists at the facility level for standard RNs and LVNs. The referral agency route is most useful for advanced practice nurses who already qualify for the professional services exemption and use a registry simply to find clients.
If You’ve Been Misclassified
If you believe a facility or agency has wrongly classified you as a contractor, California gives you several options. You can file a wage claim with the Labor Commissioner’s Office to recover unpaid minimum wages, overtime, and meal and rest break premiums. For violations affecting a group of workers, you can file a Report of Labor Law Violation with the same office. You can also file a lawsuit in court.8California Labor and Workforce Development Agency. Workers
If you were denied unemployment, disability, or paid family leave benefits because of your classification, apply through the Employment Development Department. The EDD evaluates your status independently when you file a claim, so you do not need to resolve the classification dispute first.
Federal Rules Still Apply
Clearing California’s rules does not end the analysis. The IRS runs its own common-law test for federal tax purposes, grouping the evidence into behavioral control, financial control, and the type of relationship. There is no fixed number of factors that decides the outcome; the IRS looks at the entire relationship.9Internal Revenue Service. Independent Contractor (Self-Employed) or Employee? If you or a hiring entity wants certainty, either side can file Form SS-8 requesting a formal determination from the IRS.10Internal Revenue Service. About Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding The process can take months, and the ruling is binding.
Once you are properly classified as a contractor, you take on the tax responsibilities an employer would otherwise handle. Self-employment tax runs 15.3% on net earnings, with 12.4% for Social Security on income up to $184,500 in 2026 and 2.9% for Medicare on all net earnings. Earnings above $200,000 ($250,000 for married couples filing jointly) carry an additional 0.9% Medicare surtax.11Social Security Administration. If You Are Self-Employed Quarterly estimated tax payments to the IRS are required to avoid underpayment penalties.12Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals Factor this into any rate you negotiate; a contractor rate that merely matches an employee hourly wage leaves you worse off after taxes and lost benefits.