Ninth Circuit asks California high court to decide if Dynamex applies retroactively

The U.S. Court of Appeals for the Ninth Circuit on Monday, July 22, withdrew a May opinion that said the Dynamex decision should be applied retroactively and asked the California Supreme Court to decide.

In May, the Ninth Circuit ruled that the ABC test adopted in the California Supreme Court’s landmark Dynamex decision, which set a standard for classifying workers, should be applied retroactively. As part of a wage case between a class of janitors and an international cleaning business (Jan-Pro Franchising) that dates back to 2008, the Ninth Circuit panel determined that the ABC test applied and vacated a lower court’s grant of summary judgment.

Jan-Pro filed a request for a rehearing en banc (by all the judges of a court) and the California Chamber of Commerce wrote an amicus brief in support of the cleaning company.

“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.”

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. The Ninth Circuit’s ruling that the decision could be applied retroactively increased the level of uproar.

A lawyer told Bloomberg Law that the Ninth Circuit’s ruling “could be devastating to many businesses.”

The recent order by the Ninth Circuit withdraws its previous decision and kicks the question to California’s high court.

“A revised disposition and an order certifying the California Supreme Court the question of whether Dynamex Ops. W. Inc. v. Superior Court applies retroactively will be filed in due course,” the Ninth Circuit wrote.