California Supreme Court Concludes That Dynamex Applies Retroactively

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As we have previously written here, the California Supreme Court’s 2018 decision in Dynamex Operations West, Inc. v. Superior Court dramatically changed the standard for determining whether workers in California were properly classified as independent contractors, creating a new “ABC” test that has subsequently been codified as AB 5. A significant question left open was whether Dynamex would apply retroactively.

In Vasquez v. Jan-Pro Franchising International, Inc., the California Supreme Court has concluded that Dynamex indeed applies retroactively.  Rejecting an argument that the “ABC” test created new law and therefore should not be applied retroactively, the California Supreme Court determined that the decision did nothing more than provide an authoritative definition of what it means to “suffer or permit to work.”

The decision means that Dynamex will be applied in independent contractor misclassification cases that were already pending when Dynamex was first issued.  And it also means that it will be applied to pre-Dynamex conduct in new lawsuits that might still be filed, subject to the applicable statutes of limitations for such claims.

With Dynamex, AB 5 and now Vasquez, one thing is certain – it is more important than ever for companies that do businesses in California to review their relationships with workers classified as independent contractors to try to avoid litigation or defend against it.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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