IANAL, but if you are building a software product, and you hire someone to do software development work on your core product, then CA may easily take the view that person is an employee because of the ABC test (as of September 2019).
1. You don't tell them what to do, you just negotiate an end product.
2. Your main business is something else.
3. They routinely have other clients.
All three, or they're an employee.
The plumber who unclogs your drains is an independent contractor. Someone who does the work of your business is an employee. It's that simple.
For example, see https://www.nolo.com/legal-encyclopedia/exempt-job-categorie....
Software consulting probably (IANAL) falls under "Business to business consulting", at least if you structure your consulting shop correctly. If you're just working long-term full-time for one client and not offering your services up elsewhere as the GP's case describes, you're probably mis-classified under the ABC rule.
They absolutely hate orgs and individuals that provide an alternative to California's onerous requirements and don't pay into the state funds
Many companies hire through staffing companies, rather than hiring 1099s directly. But when the contracting company only provides a service to you, and their 1099s are only contracted to your offices, you may find that the employees of this other company are considered to be employees of your company instead. Courts can decide to pierce these abstractions. The most notable example is the Microsoft permatemp lawsuit: https://en.wikipedia.org/wiki/Permatemp
If your company has so much piping that the local plumber hires staff dedicated to you for years on end, then it's conceivable that a court would decide that the plumbing company's employees are actually your employees.
Personally, I've always wondered whether government contractors could win a lawsuit to be considered government employees. The US government is by far the biggest "permatemp" employer and seems to itself regularly flout these kinds of laws.
Maybe if this nonsense was actually addressed and made strict, the US government would finally be forced to provide just compensation for it's employees instead of always just shoving piles of money at external contractors and allowing untold grift
You are engaged in a trade or business and the payment was made to another business that is incorporated, but was not for medical or legal services
Otherwise, you are supposed to file a 1099 (assuming it was trade/business work, not personal stuff for your house, etc).
https://www.irs.gov/businesses/small-businesses-self-employe...
It certainly doesn't pass this contractor requirement...
"The worker performs work that is outside the usual course of the hiring entity’s business"