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9th Circuit Extends New Test for Worker Classification Retroactively

Last week, the 9th Circuit for the U.S. Court of Appeals expanded the reach of a recent California Supreme Court landmark decision, the Dynamex case, which made it more difficult for companies to classify workers as independent contractors rather than employee sunder California wage order laws by creating a new test, now titled the “ABC test.” Under this new ABC test, workers are presumed to be employees unless the hiring entity establishes:

1. That the worker is free from the 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;
2. That the worker performs work that is outside the usual course of the hiring entity’s business; and
3. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Taking this new test even further, the 9th Circuit in its Vazquez v. Jan-Pro Franchising International, Inc. opinion decided the ABC Test applies retroactively.  This means that employers who had relied on the previous existing law for classifying whether workers are employees or independent contractors may now be subject to liability for misclassifying workers as independent contractors.

This decision will have immediate ramifications for some very prominent companies that rely on independent contractors,such as the ride-sharing giant Uber which recently became public upon release of its IPO.  A big shake up like the Dynamex case could be damaging to many businesses and may force many California employers to re-classify their workforce.  It will be very interesting to see how businesses adapt to this new change in law.

If you have reason to believe you have been misclassified as an independent contractor, please give Venardi Zurada LLP a call to speak with one of our experienced employment law attorneys.

1. Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal. 5th 903 (see previous blog post for discussion of Dynamex case,titled “Can Doctors, and Other Medical Professionals, Be Misclassified as Independent Contractors? Yes.”)
2. Dynamex, 4 Cal. 5th at 916-17.
3. Under California’s statute of limitations, liability would likely only extend to the four years prior to the 2018  Dynamex decision.