The Dynamex decision and the passage of AB 5 has led to confusion about the applicable standard to use for determining whether a worker is misclassified as an independent contractor. That did not stop the Second Appellate Court in Gonzales v. San Gabriel Transit, Inc., from holding that the ABC test set forth in Dynamex is retroactive.
On October 8, 2019, the Court of Appeals for California’s Second Appellate District in Gonzales v. San Gabriel Transit, Inc., ordered the trial court to reconsider its denial of class certification of a proposed class of allegedly misclassified drivers because the appeal was pending when the Dynamex decision was issued.
The Gonzales court held that: the "ABC test adopted in Dynamex is retroactively applicable to pending litigation" asserting wage order violations and Labor Code violations based on wage orders; and it applies to Labor Code claims that are either "rooted in one or more wage orders, or predicated on conduct alleged in one or more wage orders."
For other Labor Code claims not rooted or predicated in a wage order, the proper standard is the Borello test, which looks to multiple factors and focuses on control of the manner and means to complete the work.
Whether the California Supreme Court will weigh in and address the question certified by the 9th Circuit in Vasquez – i.e., whether the ABC test set forth in the Dynamex decision applies retroactively to claims covering the time period prior to April 2018 – remains uncertain.
See our prior advisory on this here.
Assuming the California Supreme Court does review Vasquez, it may review the Gonzales decision in conjunction. Until then, Gonzales is binding authority on retroactive application of the ABC test.
The Gonzales decision may continue the uptick in filing of wage-hour class action lawsuits. The decision brings more clarity as to the applicable legal standard to use when considering potential exposure for independent contractor misclassification, and for making decisions about compensation and classification practices. Employers should continue to consult with experienced California employment legal counsel in doing so.