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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.
Seyfarth Synopsis:
In a unanimous decision, the California Supreme Court held that the worker friendly “ABC” test set forth by the Court in its 2018 landmark ruling, Dynamex Operations West, Inc. v. Superior Court, applies retroactively. The ABC test thus applies to all pending cases governed by the California Wage Orders in determining whether a worker is an independent contractor or an employee. Vazquez v. Jan-Pro Franchising Int’l, Inc.
The Facts
Jan-Pro Franchising, International, Inc. is a franchisor whose franchisees offer cleaning and janitorial services. In May 2017, the U.S. District Court for 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.
Since April 2018, when the California Supreme Court issued its
Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018) decision, which radically changed the way in which courts differentiated between an independent contractor and employee in California, businesses have grappled with the ever-expanding grip of that decision. One of the key questions, unaddressed in the
Dynamex decision, was whether it was intended to be applied retroactively. Litigants have been grappling with this question for almost two years. Yesterday the question was answered. More specifically, in
Vasquez v. Jan-Pro Franchising, Inc., 2021 WL 127201 (Cal.),(Jan 14, 2021) the California Supreme answered the Ninth Circuit’s call to determine whether the Dynamex independent contractor test (commonly referred to as the A-B-C test) should be applied retroactively. The answer is yes.
Friday, January 15, 2021
In
Vazquez v. Jan-Pro Franchising International (Vazquez), the California Supreme Court answered “Yes” to the Ninth Circuit’s question, “Does your independent contractor ABC test in
Dynamex Operations West, Inc. v. Superior Court (Dynamex) apply retroactively?”
In 2018, the
Dynamex Court concluded that under California wage orders, anyone who performs work for a business is presumed to be an employee entitled to the protections afforded by the wage orders.
The
Dynamex Court also held that a hiring entity can avoid that presumption of employment and wage order application when it comes to independent contractors, but only if the hiring entity establishes: