California Supreme Court to Determine Whether “Dynamex” Decision Applies Retroactively

As you may have read in our Client Alert from May 23, 2019, in Vazquez v. Jan-Pro Franchising Int’l, Inc., (2019) 923 F.3d 575, the Ninth Circuit Court of Appeals ruled that the Dynamex decision applies retroactively.

As a reminder, in Dynamex Operations West, Inc. v. Super. Ct., (2018) 4 Cal. 5th 903, the California Supreme Court adopted the “ABC” test when evaluating whether a worker is an employee or independent contractor.  Under this test, companies have the burden to establish the following in order to classify a worker as an independent contractor:

1. that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
2. that the worker performs work that is outside the usual course of the hiring entity’s business; and
3. that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Dynamex, 4 Cal. 5th at 957.

However, on July 22, 2019, the Ninth Circuit Court of Appeals added another twist to the ever-changing laws concerning independent contractors in California.  Namely, the Court of Appeals withdrew the May 23, 2019 opinion in Vazquez and requested that the California Supreme Court determine whether the Dynamex decision applies retroactively.

Given the severe ramifications of applying the “ABC” test retroactively, California employers that designate workers as independent contractors will eagerly await a decision by the California Supreme Court.  If the California Supreme Court holds that the test does indeed apply retroactively, we expect an increase in cases alleging misclassification of workers as independent contractors given that the “ABC” test is more worker-friendly that the previous test to determine the status of a worker.