Highlights
The California Supreme Court in Vazquez v. Jan-Pro Franchising
International, Inc. ruled that its decision in Dynamex Operations
West, Inc. v. Superior Court 4 Cal. 5th 903 (2018) (Dynamex),
applies retroactively to all cases not yet final as of the date
Dynamex issued on April 30, 2018.
This critical holding finally and definitively answers the open
question regarding the retroactive application of the ABC test for determining employee vs. independent
contractor status.
The ruling means that nearly all cases that were not final as
of the date Dynamex issued will be governed under the ABC standard instead of Borello.
The California Supreme Court in
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[co-author: Michelle Lappen]
On January 14, 2021, the California Supreme Court decided, at the request of the Ninth Circuit, that its decision in
Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) applies retroactively.
Dynamex adopted the “ABC test” for determining whether a worker is an employee or independent contractor for purposes of the obligations imposed by California’s wage orders. This holding makes it more difficult for a hiring entity to properly classify a worker as an independent contractor. The three-prong test requires the hiring entity to prove that the worker is: (A) free from the control and direction of the hiring entity; (B) performing work outside of the usual course of the hiring entity’s business; and (C) customarily engaged in an independently established trade of the same nature as the work performed.
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On January 14, 2021, the California Supreme Court held that the ABC Test, as articulated in
Dynamex, applies retroactively to claims under California’s Industrial Welfare Commission Wage Orders.
ABC Test Background
In 2018, in notable
Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court held that for purposes of compliance with California’s IWC wage orders, workers are presumed employees, unless the hiring entity proves ALL of the following under the so called “ABC” test:
(A) 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
Let Me Tell You What It’s All About
Jan-Pro Franchising, International, Inc. is a franchisor whose franchisees offer cleaning and janitorial services. In
Vazquez v. Jan- Pro (“
Vazquez”), in May 2017, the Northern District of California granted Jan-Pro summary judgment in a case brought by independent contractor franchisees claiming they should have been treated as Jan-Pro employees. The plaintiffs then appealed the ruling to the U.S. Court of Appeals for the Ninth Circuit.
While the appeal was pending, the California Supreme Court issued its decision in
Dynamex (which we previously posted about here). In
Dynamex, the court held that, for purposes of claims arising from the Wage Orders, the “ABC” test governs whether workers are properly classified as independent contractors rather than employees.