Last year, the California Supreme Court decided Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a landmark decision that dramatically increased the risk of misclassifying individuals as independent contractors. As previously reported, although Dynamex replaced the longstanding Borello standard with the “ABC” test, it also left two critical questions unaddressed. First, Dynamex did not address whether the ABC test applies retroactively. Second, Dynamex did not decide whether its scope was limited to coverage under the Industrial Wage Commission’s (“IWC”) Wage Orders or if its holding generally applied to the Labor Code as a whole. In the last five days, both questions have been answered.
On May 2, 2019, the Ninth Circuit found that Dynamex applies retroactively under California law in Vazquez v. Jan-Pro Franchising International, Inc., the most notable decision to date regarding Dynamex’s retroactivity. Shortly thereafter, on May 3, 2019, the Division of Labor Standards Enforcement (“DLSE”), California’s wage and hour enforcement agency, issued a letter opining the ABC test applies to both the IWC Wage Orders and any Labor Code provisions that enforce requirements set forth in the Wage Orders. Although neither the Ninth Circuit nor the DLSE can authoritatively interpret California law, these developments indicate that Dynamex’s scope—which governs hundreds of thousands of independent contractor relationships throughout the state—has continued to expand its already extensive reach.
Continue Reading The Future of Independent Contractors: Ninth Circuit Applies Dynamex Retroactively and the DLSE Issues Opinion Letter Expanding Its Scope