The battle over the scope and applicability of the so-called "ABC test" in determining California employers' potential liability under wage and hour and other state labor laws continues unabated. On January 21, 2020, plaintiffs in a case under review asked the Supreme Court of California to define the scope of the test broadly, and to apply it across a broader range of laws.
By way of brief background, in its 2018 Dynamex decision, the California Supreme Court overturned three decades of precedent and ruled that the ABC test was the appropriate standard for determining whether a given worker was an employee or an independent contractor under California's state wage orders. Under the ABC test, a worker is generally considered to be an employee unless the putative employer can prove: (a) the worker was not under its direction and control in performance of the work in question; (b) the worker's business was not in the hiring company's usual course of business; and (c) the worker was customarily engaged in an independent trade or business. As a practical matter, the ABC test results in dramatically more workers being classified as statutory employees, rather than contractors.
In May 2019, in Vazquez v. Jan-Pro Franchising International, Inc., the U.S. Court of Appeals for the Ninth Circuit held that Dynamex was retroactive in its application, potentially exposing putative employers to years of wage and hour liability. In July, the Ninth Circuit withdrew that decision, indicating that it would instead ask the Supreme Court of California to decide the question of Dynamex's retroactivity. In September, the Ninth Circuit certified the sole question of retroactivity to the California Supreme Court, which granted review.
Separate and apart from these efforts, plaintiffs in an unrelated case regarding franchisors and joint-employment liability – Salazar v. McDonald's Corp. – asked the Ninth Circuit to certify additional questions regarding Dynamex to the California Supreme Court, including questions regarding the applicability of the case to the franchise model of business, and the role – if any – of the ABC test in determining joint-employer status. In December 2019, the Ninth Circuit declined to do so.
As the California Supreme Court takes up the question of retroactivity in Jan-Pro, plaintiffs in their opening brief have asked the court to go beyond the sole question of retroactivity presented, and rule additionally (and expansively) on the series of questions the Ninth Circuit declined to certify. While it is unclear whether the court will accept this latest invitation, what is clear is that the plaintiffs' bar in California will continue to press aggressively for the broad application of the ABC test, and dramatically increased employer liability, when- and wherever possible. Littler will continue to monitor and report on relevant developments in this case and others as they occur.
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