Employee or Independent Contractor?

California High Court Makes Landmark Independent Contractor Ruling Retroactive

From Courthouse News Service, Maria Dinzeo reports that the California Supreme Court said that the ABC test adopted by Dynamex would apply retroactively. Maria writes:

On Thursday, the high court held that it does. [apply to a case alleging misclassification in 2006]

“Given the constraints imposed by the statute of limitations, the retroactive application of Dynamex will in practice affect a limited number of cases. Nonetheless, in light of the general rule of retroactivity of judicial decisions and the fundamental importance of the protections afforded by the wage orders, we find no compelling justification for denying workers included in such lawsuits the benefit of the standard set forth in Dynamex,” Chief Justice Tani Cantil-Sakauye wrote for the unanimous court.

She said that while Martinez left open the question of whether the farmworkers were properly considered employees or, instead, independent contractors in the wage order context, it put employers on notice that the issue could come up in a future case.

Even so, Jan-Pro argued it reasonably relied on legal decisions prior to Dynamex, particularly the 11-factor classification test set forth in S.G. Borello & Sons v. Dept. of Industrial Relations.

But Cantil-Sakauye wrote the narrower test adopted in Dynamex “was not beyond the bounds of what employers could reasonably have expected” since it drew on some of the factors outlined by Borello.

“We reject the contention that litigants must have foresight of the exact rule that a court ultimately adopts in order for it to have retroactive effect,” she wrote. “And indeed, the ABC test articulated in Dynamex was within the scope of what employers reasonably could have foreseen. Prior decisions of this court had certainly provided putative employers notice concerning the potential breadth of the suffer or permit to work language.”

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