En banc hearing requested in decision to apply Dynamex retroactively

The U.S. Court of Appeals for the Ninth Circuit’s ruling that the Dynamex decision applies retroactively “is deeply flawed,” the California Chamber of Commerce wrote last week in an amicus brief.

The Chamber wrote to the Ninth Circuit in support of Jan-Pro Franchising’s request for a rehearing en banc. In May, the Ninth Circuit ruled that the California Supreme Court’s landmark Dynamex decision, which established the ABC test as the standard for classifying workers, applied retroactively and vacated a lower court’s grant of summary judgment. The lower court now must re-examine the case using the ABC test.

Jan-Pro is an international cleaning business involved in a wage lawsuit with a class of janitors that dates back to 2008.

“We conclude that Dynamex does apply retroactively, that none of Jan-Pro’s other efforts to avoid reaching the merits are viable, and that the case must be remanded to the district court to consider the merits in light of Dynamex,” Judge Frederic Block wrote in his opinion for the Ninth Circuit.

In 2018, the California Supreme Court established the ABC test, which considers all workers to be employees unless the hiring business demonstrates that all of the factors are established:

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

Dynamex created an uproar in the trucking industry and for other California businesses, which make a habit of using independent contractors. A lawyer told Bloomberg Law that the Ninth Circuit’s ruling “could be devastating to many businesses.”

As part of its amicus brief, the California Chamber wrote that the Ninth Circuit erred in its decision to apply Dynamex retroactively.

“Imposing liability on a party for conduct that was lawful when it occurred is fundamentally unfair and irreconcilable with California and U.S. Supreme Court precedent,” the Chamber wrote. “Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly.

“(It) is a deeply flawed opinion with sweeping and troublesome ramifications. It will harm blameless businesses throughout California.”

The Western States Trucking Association and California Trucking Association are both challenging the Dynamex decision, arguing that it creates an excessive burden on interstate commerce and is pre-empted by federal law.

The trucking groups contend that the B-prong of the test makes it impossible for trucking companies to hire independent contractors to haul freight. A U.S. District Court dismissed Western States’ challenge, but the group filed an appeal with the Ninth Circuit on April 18.