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.

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Photo of Benjamin A. Tulis Benjamin A. Tulis

Benjamin Tulis is a principal in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on advice and counsel within the labor and employment law sector. Ben is a member of the California Advice and Counsel resource group.

Ben counsels…

Benjamin Tulis is a principal in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on advice and counsel within the labor and employment law sector. Ben is a member of the California Advice and Counsel resource group.

Ben counsels employers on a host of employment issues, including wage and hour laws, leaves of absence, employment-related agreements, incentive plans, independent contractor classifications, exempt/non-exempt classifications, company policies, reductions in force, workplace investigations, employee discipline, litigation avoidance and helping employers address legal developments on the fly as they arise. Ben assists employers with a wide variety of employment-related agreements, including but not limited to employment agreements, confidentiality agreements, commission agreements, incentive plans, contractor agreements, severance agreements, arbitration agreements and various other agreements with employees and third parties. Ben helps employers develop incentive arrangements, including commission arrangements with industry-specific compliance issues.

Photo of Susan E. Groff Susan E. Groff

Susan E. Groff is a principal in the Los Angeles office of Jackson Lewis P.C. She is co-leader of the firm’s California Advice and Counsel resource group. The group delivers legal and practical guidance to assist employers in navigating what are frequently multi-disciplinary…

Susan E. Groff is a principal in the Los Angeles office of Jackson Lewis P.C. She is co-leader of the firm’s California Advice and Counsel resource group. The group delivers legal and practical guidance to assist employers in navigating what are frequently multi-disciplinary issues.

Susan counsels management on a host of labor and employment issues, including wage and hour laws, disability and leave management, harassment and discrimination complaints, workplace investigations, reductions in force, litigation avoidance, and discipline and termination questions.

Due to California’s nuanced and numerous disability and leave requirements, Susan dedicates much of her practice to advising employers on federal and California requirements for disability accommodation and protected leaves of absence. Importantly, she partners with employers not only on these technical disability and leave laws, but also on practical solutions in handling the same.

Susan also provides guidance to employers on California’s challenging wage and hour laws. In addition to day to day advice, she assists with employer audits, compensation plan reviews, and policies in this area.