California Supreme Court Applies Independent Contractor Standard Retroactively; Does Not Reach Applicability to Franchises -

The California Supreme Court has held that its Dynamex decision applies retroactively, answering a question certified to it by the Ninth Circuit in Vazquez v. Jan-Pro Franchising Int’l, Inc., --- P.3d ---, 2021 WL 127201 (Cal. 2021). Although the case involved a franchise relationship, the court explicitly declined to address the applicability of Dynamex to franchise relationships. Jan-Pro is a franchisor whose franchisees offer cleaning and janitorial services. It licenses its marks to master franchisees, who in turn license unit franchisees. In 2008, a group of unit franchisees sued Jan-Pro, alleging that they had been improperly classified as independent contractors and were entitled to employee rights such as minimum wages and overtime. Following changes of plaintiffs and venue, Jan-Pro prevailed on summary judgment. That decision was vacated by Vazquez v. Jan-Pro Franchising, 923 F.3d 575 (9th Cir. 2019) (summarized in Issue 242 of the GPMemorandum). There, the Ninth Circuit concluded that California courts would apply retroactively the California Supreme Court’s adoption in Dynamex Operations W. v. Superior Court, 416 P.3d 1 (Cal. 2018) of the “ABC test” to distinguish independent contractors from employees in the wage and hour context. Jan-Pro successfully petitioned the Ninth Circuit for panel rehearing, the court withdrew its earlier decision and certified the retroactive application question to the California Supreme Court.