California: Dynamex is Retroactive!

In Vazquez v. Jan-Pro Franchising International Inc., the California Supreme Court said that the ABC independent contractor test originally set forth in Dynamex is retroactive. Specifically, the Court stated that the decision did not change any “settled rule” about what independent contractor test applied to California’s Wage Orders. Prior to Dynamex, employers used the multi-factor test set forth in Borello to determine independent contractor status. However, the Court in Vazquez explained that employers had no reasonable grounds to rely on Borello for purposes of Wage Order claims. Employers may now be liable for failing to use the ABC test before the Dynamex decision was issued.

Interestingly, AB 5, which codified and expanded upon Dynamex, expressly states that certain exceptions under AB 5 shall apply retroactively to existing claims and actions to the “maximum extent permitted by law.” It is unclear at this time how broadly this language will be interpreted to cover those industries or jobs that are now legally subject to the Borello test. Continue to look for developments on this topic.

Action Items