Today, in responding to a certified question from the United States Court of Appeals for the Ninth Circuit, the California Supreme Court held in Vazquez v. Jan-Pro Franchise International, Inc., S258191 (2020) that the three-part test announced in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018) applies retroactively.
In Dynamex, the court considered what standard applies under California law to determine whether workers should be classified as employees or independent contractors when considering claims under the California Wage Orders. In that case, the court held that a hiring entity may classify a worker as an independent contractor only if it establishes: (A) 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 and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade that is distinct from the nature of the work performed by the hiring entity. This standard is commonly referred to as the ABC test.
In Vazquez, the court noted that Dynamex presented an issue of first impression: how to determine whether a worker is an employee or independent contractor under the Wage Orders. The court wrote that the term “employ,” as used in the Wage Orders, had consistently been used to mean “suffer or permit to work” and that an “employee” is “any person employed by an employer.” According to the court, it adopted the ABC test in Dynamex because it is the “most consistent with the history and purpose of the suffer or permit to work standard in [the Wage Orders].” Additionally, the court had held that it was appropriate to put the burden on the hiring entity to establish that a worker is an independent contractor. Moreover California’s jurisprudential principles establish a presumption that judicial decisions apply retroactively. Therefore, the court reasoned that it is appropriate to apply Dynamex retroactively to cases interpreting the Wage Orders.
Jan-Pro argued that the court should apply the exception that judicial decisions will not apply retroactively when doing so would undermine fairness and public policy. It argued that businesses could not have anticipated that the ABC test would govern when they classified their workers as independent contractors. Furthermore, Jan-Pro argued that it reasonably...
