Understanding the Stakes of Worker Classification in Connecticut

Worker classification affects everything from minimum wage compliance to tax obligations and workers’ compensation. In Connecticut, this process isn’t left to employer discretion. Instead, state law requires adherence to a three-part legal standard known as the ABC Test, which determines whether a worker should be treated as an employee or an independent contractor.

Misclassifying a worker can expose businesses to serious risks—unpaid wage claims, back taxes, penalties, and lawsuits. Meanwhile, workers who are misclassified may miss out on benefits and legal protections they’re entitled to by law. In short, the consequences of misclassification are significant on both sides, making it essential to understand how the ABC Test applies.

What Is the ABC Test?

The ABC Test is used by the Connecticut Department of Labor (CTDOL) to assess a worker’s employment status under unemployment compensation laws. To classify a worker as an independent contractor, all three prongs of the test must be met. If even one part fails, the worker is legally considered an employee.

Here’s a breakdown of the test:

A. The worker is free from control and direction in performing the service, under both the contract and in fact.

This prong asks whether the employer exerts behavioral or financial control over the worker. If the employer dictates how, when, or where the work is done, the worker likely fails this part.

B. The service is performed outside the usual course of the employer’s business or is performed outside all the places of business of the enterprise.

This prong requires that the worker’s role is not central to the business. For example, a cleaning service hired by a software company might pass this test, while a freelance programmer doing core development work for a tech startup probably wouldn’t.

C. The worker is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

This means the worker must have an established business or regularly offer the same services to others, not just work exclusively for one company.

If a worker cannot meet all three parts, they must legally be classified as an employee.

Why This Matters for Employers

Misclassification in Connecticut can have wide-reaching implications:

• Back pay and benefits: If a worker is misclassified, they may be entitled to retroactive pay, including unpaid overtime, minimum wage adjustments, and benefits like unemployment or workers’ compensation.
• Fines and penalties: The Connecticut Department of Labor can impose financial penalties for each misclassified worker. Businesses may also owe unpaid employment taxes.
• Lawsuits and liability: Workers may sue for misclassification, particularly if they were denied benefits, injured on the job, or subjected to wage violations.
• Reputational damage: Public scrutiny and DOL investigations can affect a company’s credibility and future hiring.

Small businesses are often the most vulnerable, especially those using gig workers or contractors for essential business operations.

How the ABC Test Applies in Practice

Connecticut courts and the DOL take a practical, fact-based approach to evaluating classification. Merely labeling someone an “independent contractor” in a contract doesn’t carry weight if the working relationship says otherwise.

Example: A marketing agency hires a graphic designer on a contract basis. The agency assigns specific work schedules, reviews each draft before client submission, and requires the designer to use internal company software. Even if the worker has a 1099 tax form and a freelance title, the agency likely fails Part A and possibly Part C of the ABC Test—meaning the designer would be considered an employee under CT law.

Another scenario: A landscaping company hires a tree removal expert who runs their own business, advertises online, carries liability insurance, and sets their own schedule. The landscaper is hired for occasional subcontracted work. This relationship may pass all three parts of the ABC Test.

Industries Frequently Affected

Certain sectors are more prone to worker misclassification due to the nature of project-based work or remote services:

• Construction and skilled trades
• Transportation and delivery
• Technology and IT
• Healthcare (e.g., traveling nurses)
• Cleaning and janitorial services
• Creative services (e.g., writing, design, marketing)

In these industries, understanding the ABC Test is essential not just for legal compliance but for managing hiring strategy and workforce costs effectively.

Compliance Tips for Connecticut Employers

To avoid potential legal issues, Connecticut businesses should regularly review their worker relationships. Here are key steps to maintain compliance:

• Audit current contractors: Use the ABC Test to evaluate whether contractors meet all three requirements.
• Update contracts: Ensure written agreements reflect actual working conditions and do not conflict with independent contractor status.
• Avoid behavioral control: Don’t set schedules, require specific tools, or supervise how the work is done.
• Encourage independent business practices: Contractors should market their services, take on multiple clients, and provide their own equipment.
• Consult legal or HR professionals: Especially when expanding your workforce or hiring in a new role, getting legal advice can prevent expensive errors.

Employers should also be aware that the federal government may apply different classification tests for tax or labor law purposes. However, Connecticut’s ABC Test is what governs worker classification under state unemployment and wage laws.

Conclusion

Connecticut’s ABC Test creates a strict legal framework for distinguishing independent contractors from employees. For businesses, proper classification is more than a technicality—it affects payroll costs, liability, and long-term sustainability. For workers, it determines access to fundamental rights and protections. Understanding and applying the ABC Test correctly isn’t optional—it’s an essential part of doing business in Connecticut.

Need Legal Help? Brandon J. Broderick, Attorney at Law is One Phone Call Away

If you are facing any of these workplace issues, don’t wait to take action. At Brandon J. Broderick, Attorney at Law, we are committed to advocating for employees and ensuring they receive the legal protection they deserve. Our legal team will fight for your rights, whether through negotiation or litigation.

Call us today for a free consultation to discuss your case