Feb 9

Employers Beware: California Supreme Court Says Dynamex Decision Applies Retroactively

Employers Beware: California Supreme Court Says <em>Dynamex</em> Decision Applies Retroactively

Brian T. Gravdal, Esq.

In Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal. 5th 903 (“Dynamex”), the California Supreme Court established the three-factor “ABC test” to determine whether a worker is an employee or independent contractor for claims arising under California’s Wage Orders. The “ABC test” is notoriously burdensome for employers because under Dynamex, a worker is presumed to be an employee unless the employer can prove all of the following:

A. The worker is free from control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B. The worker performs work that is outside the usual course of the hiring entity’s business.
C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Now, the universe of employers potentially subject to liability for the misclassification of workers has once again expanded. On January 14, 2021, the California Supreme Court decided that the decision in Dynamex applies retroactively to all non-final cases that arose prior to the original Dynamex decision in April 2018.
The retroactive applicability of the Dynamex decision (including the employee-presumption and “ABC test” components) was a critical question left unanswered by the Court. However, that question has now been answered unambiguously. The Court held that there was no reason to depart from the “well-established general principle” that judicial decisions “interpreting legislative measures” are retroactive.
The attorneys at Berman, Berman, Berman, Schneider & Lowary LLP will continue to monitor these developments and can address any questions you have regarding the above. They are uniquely qualified to provide additional insight and guidance.