From The National Law Review, Michael S. Kun discusses a recent case in which the Ninth Circuit Court of Appeals said that California’s Dynamex decision adopting the ABC test for determining if workers were employees or independent contractors applied retroactively. Michael writes:
The Ninth Circuit has now addressed that issue and has concluded that Dynamex in fact applies retroactively.
In Vazquez v. Jan-Pro Franchising International, Inc., the defendant – an international janitorial cleaning business — was awarded summary judgment on minimum wage and overtime claims stemming from allegations that janitors had been misclassified as independent contractors as part of its “three-tier” franchising model. The plaintiffs appealed, and the Dynamex decision was issued while the case was on appeal. The Ninth Circuit ordered the parties to brief the effect of that decision on the merits of the case.
The defendant devoted most of its supplemental briefing to arguing that Dynamex did not apply retroactively. The Ninth Circuit disagreed, concluding that it in fact applies retroactively largely because the Dynamex Court stated it was merely “clarifying” existing law rather than departing from it, and remanded the case to the district court for further proceedings in which the new “ABC” test is to be applied retroactively.
Barring a dramatic development, such as a reversal by the United States Supreme Court, this decision should be of great concern to any entity that retained workers as independent contractors prior to Dynamex. Those entities may now be exposed to litigation for failing to comply with an “ABC” test that they had no reason to believe they needed to comply with for the simple reason that it did not even exist.
Read the full story at California’s New ABC Test For Independent Contractors