Why dog walking keeps landing in worker classification disputes
Pet care work often sits in the gray area between gig work and traditional employment. Dog walking is a prime example. Walkers follow set routes, handle repeat clients, and often carry out company policies. At the same time, some walk for multiple apps or companies and set their own schedules. This overlap makes classification tricky for owners and operators.
The stakes have risen as more states and agencies crack down on worker misclassification. Enforcement often starts in industries where the line between independent contractor and employee is blurry. Pet care regularly appears on those enforcement lists. Owners who misclassify walkers risk back pay, taxes, and penalties, even if the mistake was unintentional.
Understanding the rules is not just about following the law. It shapes recruiting, scheduling, pay structure, and the way services are marketed to clients. A mismatch between actual practices and the paperwork can bring costly audits or lawsuits. Knowing the main legal tests is the first step to avoiding trouble.
Keep reading: What Happens After a Dog Bites Someone on Your Walk
The IRS common law test: behavioral, financial, and relationship factors
The IRS looks at three main categories to decide if a worker is an employee or a contractor: behavioral control, financial control, and the nature of the relationship.
Behavioral control
This asks who decides how the work gets done. If you tell your walkers exactly when, where, and how to do their job, provide training, or require detailed checklists, the IRS may see them as employees. Occasional tips or general guidelines are less risky. The more day-to-day control you exercise, the more likely the IRS will find an employment relationship.
Financial control
This covers who supplies equipment, how workers are paid, and whether the worker can make a profit or loss. If walkers use their own leashes and pay for their own insurance, that supports an independent contractor role. If you provide supplies, reimburse expenses, or guarantee a minimum amount of work, the scale tips toward employee status.
Relationship factors
Written contracts matter, but they do not override how the work actually happens. If walkers get benefits, or if there is an expectation of ongoing work, that suggests employment. Temporary or project-based work, with no guarantee of future jobs, leans toward contractor status.
The federal economic reality factors under the Fair Labor Standards Act
Under the Fair Labor Standards Act, the Department of Labor uses the "economic reality" test. This looks at whether the worker is economically dependent on the company or is in business for themselves. It goes beyond paperwork to the facts on the ground.
- Nature and degree of control: Who sets schedules, rates, and routes?
- Opportunity for profit or loss: Can the walker earn more through skill or business management?
- Investment in equipment: Does the walker bring their own tools, or does the company provide everything?
- Permanency of the relationship: Is the engagement ongoing or for a set period?
- Skill and initiative: Does the job require specialized skills, or is it entry-level work?
If the walker is free to take work from multiple sources, sets their own schedule, and brings in their own clients, they look more like a contractor. If they rely on your company's assignments, tools, and rules, the Department of Labor may call them an employee.
Keep reading: Platform Fees, Direct Booking, and Where Walk Rates Are Going
The ABC test and the states that apply it to pet care work
Many states have moved toward the "ABC test," which is tougher than the IRS or federal standard. Under this test, a worker is presumed to be an employee unless all three of these conditions are met:
- The worker is free from control and direction in performing the work, both in contract and in fact.
- The work is performed outside the usual course of the business of the company.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Most dog walking businesses fail part B. Walking dogs is the core service they offer. That makes it very hard to classify walkers as contractors under the ABC test. Even if walkers set their own hours and use their own leashes, the company's main business is still dog walking.
California, Massachusetts, New Jersey, and several other states use some version of the ABC test. The result is that most pet care businesses in these states must classify their workers as employees, unless the walker truly operates an independent business with multiple clients and marketing separate from the company.
California AB 5 and what it changed for small pet care companies
California's AB 5 law cemented the ABC test as the standard for most workers in the state. Pet care operators felt the effects immediately. Many companies that had relied on 1099 contractors had to switch their walkers to W-2 employment, with payroll taxes, workers' comp, and wage laws now in play.
The law does allow for a few exemptions, but pet care is not on the list. Some operators tried to restructure their business, treating walkers as separate vendors or splitting off booking platforms. Enforcement actions, fines, and lawsuits followed for businesses that could not meet the ABC test's strict requirements.
For dog walking companies, the main hurdle is that their walkers perform the core work of the business. Even if a walker sets their own schedule and works for multiple companies, the state is likely to find an employment relationship. The only clear path to contractor status is if the walker has their own business, books clients independently, and truly operates outside the company's usual course of business.
AB 5 also brought more attention to overtime, meal breaks, and minimum wage rules. Owners had to update their policies, track hours, and sometimes adjust pricing to cover new payroll costs. The experience in California has influenced other states considering similar rules.
See how LeashReport handles this for pet services
The signals that quietly make your walkers look like employees
Many small pet care businesses unintentionally blur the line between contractor and employee. It often starts with scheduling. If you assign shifts, require clock-ins, or set strict time windows, those are signals of employee control. Letting walkers pick jobs from a list is less risky, but if you penalize them for declining or missing jobs, it undermines contractor status.
Uniforms, branded gear, and rules about how to interact with clients can also tip the scales. If you require walkers to wear a company shirt or follow a script, that suggests employment. Requiring daily check-ins, performance reviews, or mandatory staff meetings are further red flags.
Payment practices matter as well. If you pay by the hour or offer overtime, that looks like an employee relationship. Contractors are usually paid per job, per walk, or on a project basis. If you reimburse expenses or provide supplies, that can also support a finding of employment.
Many companies use mobile apps to assign jobs and collect data. If the app sets strict rules about walk timing, routes, or communications, it can be used as evidence of control. Even if the app is marketed as a convenience, regulators look at how it is used in practice.
What a genuine contractor relationship looks like on paper
A real contractor is in business for themselves. The contract should reflect this. It should state that the walker is not an employee, does not get benefits, and is free to work for other companies or direct clients. The walker should provide their own tools and supplies, carry their own liability insurance, and set their own rates when possible.
Walkers should be able to accept or decline jobs without penalty. There should be no promise of ongoing work. Payment should be per job or per walk, not hourly. The contract should allow the walker to hire helpers or subcontract their work if they choose. A contractor should invoice for services, not submit timesheets.
Marketing also matters. If the walker has their own website, business cards, or other clients, that supports contractor status. Regulators may look for evidence that the walker is truly running their own business, not just following orders from a single company.
Documentation is key. Keep copies of contracts, insurance certificates, and invoices. If there is ever a dispute, you will need to show that the relationship is structured and operates as an independent business, not as a disguised employment arrangement.
Back wages, penalties, and how an audit usually starts
Misclassification comes with real costs. If a regulator decides your walkers should have been classified as employees, you may owe back wages, unpaid overtime, and payroll taxes. Penalties can be steep, and in some cases, personal liability for owners applies. The company may also owe interest and fines on top of the original amounts.
Audits often start with a complaint from a walker who was terminated or feels underpaid. Sometimes a disgruntled worker files with the state labor board or IRS. Other times, audits start when a worker applies for unemployment or workers' comp, and the agency notices the 1099 paperwork. Random audits happen too, but most start with a trigger event.
During an audit, agencies will review contracts, payment systems, schedules, job postings, and any digital records. They may interview both owners and walkers. If they find evidence of control, ongoing work, or other employee signals, they can reclassify the relationship going back several years. That means paying back wages, overtime, taxes, and penalties for each affected worker.
Settlements are possible, but they rarely erase all liability. Defending a misclassification case can drain time and resources. Prevention is far cheaper than fighting after the fact. Regular compliance reviews help spot and fix risky practices before they attract agency attention.
Accurate recordkeeping is your first line of defense. Digital tools that log work, track job details, and provide transparent reports make compliance easier. Platforms that offer GPS walk reports, photo cards, and automatic delivery to owners also help document who did the work and under what terms. This transparency supports both compliance and client trust.
