The California Supreme Court recently ruled that the “ABC test” arising from its 2018 Dynamex decision applies retroactively to wage order cases, adding another layer of law to review in worker classification litigation.
The high court’s Vazquez decision held that Dynamex applies retroactively, but the case did not involve AB 5, Jim Manley, a Pacific Legal Foundation attorney working on its AB 5 litigation, said in an email response to the Northern California Record.
“Because Dynamex was limited to wage orders, Vazquez has very little to do with changes caused by AB 5, which goes far beyond wage orders,” Manley said. “The Vazquez decision emphasizes that Dynamex was only about wage orders, which reinforces a point we have been making since 2019: AB 5 didn’t codify Dynamex, in metastasized it into all areas of California labor law.”
Jim Manley
Manley noted the Vazquez case seems to be overlooking the sea change that Dynamex represents.
“Businesses that have relationships with independent contractors who do work that might be subject to wage orders should be worried about new misclassification claims,” Manley said.
The Vazquez decision will hinder California’s economic recovery from the COVID-19 pandemic, Kyla Christoffersen Powell, president and CEO of the Civil Justice Association of California (CJAC) told the Record by email.
“Businesses are already struggling due to COVID-19, and handing plaintiffs’ attorneys more opportunities to shake them down only adds to this burden,” Powell said. “We can expect increased litigation that drives entrepreneurs out of business at a time when California critically needs them to continue to operate, produce and employ.”
The Dynamex decision already imposed an overly stringent employee versus independent contractor classification standard, Powell said, creating a minefield for Californians wanting to hire independent contractors or be independent contractors.
“The Supreme Court’s ruling unfairly subjects companies with pending classification cases to a different standard than what they relied on for nearly 30 years, the Borello standard,” Powell said.