The U.S. Court of Appeals for the Ninth Circuit has dealt California employers another setback when responding to claims of misclassification of independent contractor status for violations of the Industrial Welfare Commission Wage Order (“IWC Wage Orders”), holding that the State’s recently-adopted “ABC” test must be applied retroactively. Vazquez v. Jan-Pro Franchising Int’l, Inc., 2019 U.S. App. LEXIS 13237 (9th Cir. May 2, 2019). Almost exactly a year earlier, the California Supreme Court, in Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, 416 P.3d 1 (Cal. 2018), broadened the definition of “employee” in the context of the IWC Wage Orders when undertaking the employee-versus-independent contractor analysis, by adopting what commonly is known as the ABC test. Under that standard, to establish that an individual is in fact an independent contractor, an employer must prove that:

A: The work must be free from the control and direction of the company in connection with the performance of the work, both under the contract for performance of the work and in fact;

B: The worker performs work that is outside the usual course of the company’s business; and,

C: The worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

With the retroactive application of the more employee-friendly ABC test, the Dynamex decision will have an even more significant impact on companies throughout California that rely on workforce configurations using independent contractors.

A detailed discussion of the Ninth Circuit’s decision in Vazquez may be found here, https://www.jacksonlewis.com/publication/california-s-abc-test-independent-contractor-analysis-be-applied-retroactively

while a discussion of last year’s Dynamex decision may be found here:

https://www.jacksonlewis.com/publication/california-supreme-court-broadens-definition-employee-independent-contractor-analysis