From JDSupra, Ross Boughton, Daniel Lyman, and Noah Woo discuss a recent California appellate case in which the court said that the ABC test adopted by the Dynamex court should be applied retroactively. They write:
On October 8, 2019, the Court of Appeals for California’s Second Appellate District in Gonzales v. San Gabriel Transit, Inc., et al., concluded that the “ABC test adopted in Dynamex is retroactively applicable to pending litigation” asserting wage order violations and Labor Code violations based on wage orders and remanded the case back to the lower court to evaluate which of the wage and hour claims were subject to retroactive application. The California Court of Appeals concluded the “ABC test” applies to Labor Code claims which are either “rooted in one or more wage orders, or predicated on conduct alleged in one or more wage orders.” As for other Labor Code claims, the Gonzales court found that the long-standing Borello test, which looks to multiple factors to answer a principle question of whether the person receiving a service has a right to “control the manner and means” of completing service, remains appropriate.
Impact of the Gonzales Decision: Prior to Gonzales, only one California Appellate Court decision (Garcia v. Border Transportation Group, LLC, 28 Cal.App.5th 558 (2018)) addressed retroactive application of Dynamex. However, in Garcia, the California Court of Appeal did not tackle the issue in broad terms. Rather, the court applied Dynamex retroactively, but did so as to the case only because the defendant, which bore the burden, never raised the issue.
The U.S. Court of Appeals for the Ninth Circuit in Vasquez v. Jan-Pro Franchising International, Inc., also initially ruled that the Dynamex decision applies retroactively. (click here for full discussion of Vasquez). However, the Ninth Circuit later withdrew this decision and, instead, certified the question of the retroactivity of Dynamex to the California Supreme Court, in which the issue is now pending.
In the interim, the California legislature passed A.B. 5, which suggests that Dynamex may, in certain circumstances, have retroactive application.
As a result of the Gonzales decision, employers that may have not used the proper legal standard for classification of independent contractors prior to Dynamex may have some exposure. However, the Gonzales decision may be short-lived if the California Supreme Court or other California courts chime in on this issue, which is expected. However, before the California Supreme Court provides an opinion on retroactive application of Dynamex, the Gonzales decision may be binding authority.