[co-author: Michelle Lappen]
On January 14, 2021, the California Supreme Court decided, at the request of the Ninth Circuit, that its decision in
Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) applies retroactively.
Dynamex adopted the “ABC test” for determining whether a worker is an employee or independent contractor for purposes of the obligations imposed by California’s wage orders. This holding makes it more difficult for a hiring entity to properly classify a worker as an independent contractor. The three-prong test requires the hiring entity to prove that the worker is: (A) free from the control and direction of the hiring entity; (B) performing work outside of the usual course of the hiring entity’s business; and (C) customarily engaged in an independently established trade of the same nature as the work performed.
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On January 14, 2021, the California Supreme Court held that the ABC Test, as articulated in
Dynamex, applies retroactively to claims under California’s Industrial Welfare Commission Wage Orders.
ABC Test Background
In 2018, in notable
Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court held that for purposes of compliance with California’s IWC wage orders, workers are presumed employees, unless the hiring entity proves ALL of the following under the so called “ABC” test:
(A) 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; and
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The California Supreme Court has concluded that the ABC Test it developed for determining whether a worker is an independent contractor or employee applies retroactively. Therefore, the ABC Test, first developed in the Court’s
Dynamex decision, applies to California wage and hour claims implicating a time period prior to issuance of the
Dynamex decision on April 30, 2018.
The Court reasoned that retroactive application was appropriate because California generally applies judicial decisions retroactively and no exception was warranted here. California recognizes an exception to the general rule of retroactivity when considerations of fairness and public policy justify an exception.
January 12, 2021
This past year saw the enactment of a variety of new employment laws in California, including new disclosure requirements for employers and changes to the independent contractor landscape. In addition, the COVID-19 pandemic has touched nearly every sector of society, in nearly every corner of the world, and employment law in California is certainly no exception. The pandemic has ushered in a new legal landscape marked by heightened requirements for employers stretching from 2020 into 2023.
Below, we outline four new laws that require attention from California employers in the new year: (1) the new requirements for California employers in reporting wage and hour data; (2) the continuing evolution of the worker classification standard and the recent passage of Proposition 22; (3) the new COVID-19 notice requirements that will require employers to notify employees of possible exposure; and (4) the new Workers’ Compensation Disputable Presumption under SB 1159. We a