January 21, 2020

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The California Supreme Court to Decide Dynamex Retroactivity

The California Supreme Court announced that it would decide whether its April 30, 2018 landmark Dynamex decision is retroactive. The Supreme Court’s determination will have a significant impact on companies utilizing independent contractors in California.

In Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, the California Supreme Court adopted the “ABC Test” to for evaluating contractor classifications under California law. On June 20, 2018, the California Supreme Court denied a petition for rehearing to address retroactivity. A summary of the ABC Test can be found in our article here. Since the decision, state and federal courts have grappled with the issue, with lower state and federal courts primarily finding that Dynamex should be applied retroactively.

In September 2019, Assembly Bill (AB 5) was  passed codifying the ABC Test and providing exemptions for certain occupations. If an exemption applies, the hiring entity is not home free as it must still satisfy the pre-Dynamex multi-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989).

AB 5, which is effective January 1, 2020, explicitly indicates that it is declaratory of existing law and that the exemptions are retroactive. However, it does not address whether Dynamex itself is retroactive. Accordingly, the question facing the California Supreme Court is whether the ABC Test should apply to contractor relationships before April 30, 2018 (and thus before the ABC Test was adopted by the California Supreme Court).

Soon after AB 5 was passed, the Ninth Circuit Court of Appeals certified the question to the California Supreme Court in Vazquez v. Jan-Pro Franchising International, Inc., 939 F.3d 1045 (9th Cir. Sept. 24, 2019). In May, the Ninth Circuit found that the ABC Test should be applied retroactively. The hiring entity asked the court to reconsider the question and on September 26, the court certified the question to California’s high court, which finally decided to hear the issue on November 20.

The court has yet to schedule oral argument. We will continue to monitor the status of the high court’s review as well as all AB 5-related developments.

Jackson Lewis P.C. © 2020

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About this Author

Benjamin A. Tulis, Employment, Benefits, Litigation Attorney, Jackson Lewis Law Firm
Associate

Benjamin Tulis is an Associate in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on employment litigation, benefits litigation, transactions, and advice and counsel within the labor and employment law sector.

Mr. Tulis represents employers and individual defendants in a wide range of employment and labor matters, including wrongful termination, matters arising under ERISA, administrative matters, wage and hour class actions, and matters involving competition and restrictive covenants.

213-689-0404
Susan E. Groff, Jackson Lewis, disability accommodation lawyer, protected absence attorney
Principal

Susan E. Groff is a Principal in the Los Angeles, California, office of Jackson Lewis P.C. She advises and counsels management on various employment related issues.

Ms. Groff advises employers on complying with federal and California requirements for disability accommodation and protected leaves of absence.

In addition, Ms. Groff counsels employers on a host of other employment issues, including wage and hour laws, harassment and discrimination complaints, workplace investigations, reductions in force, and discipline and termination questions. She also conducts training seminars on employment related issues, including sexual harassment prevention training.

213-689-0404