Following the California Supreme Court’s ruling last month that its landmark 2018 decision on independent contractor status applies retroactively, the Ninth Circuit on Tuesday vacated a district court’s finding of summary judgment for Jan-Pro Franchising International in a class action for back wages and overtime.
In Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, the California Supreme Court set out what’s known as the “ABC test” for determining whether a worker is an employee or an independent contractor, making it much harder for gig companies to classify their workers as independent contractors not entitled to traditional employment benefits like minimum wage and reimbursement for expenses.
In 2019, the Ninth Circuit held in Vazquez v. Jan-Pro Franchising International, Inc. (9th Cir. 2019) 923 F.3d 575 that Dynamex applied retroactively, but it later withdrew that finding and instead certified the question to the California Supreme Court.
Answering the question last month, the state’s high court held that Dynamex does apply retroactively, subjecting California employers to what could potentially be years of liability for improperly classifying workers.
In light of that ruling, the Ninth Circuit then amended and reissued its opinion in Jan-Pro on Tuesday. “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,” the court held, adding that applying the ruling retroactively is consistent with due process.
Besides ensuring that the plaintiffs in this case “can provide for themselves and their families,” the court held, “retroactivity protects the janitorial industry as a whole, putting Jan-Pro on equal footing with other industry participants who treated those providing services for them as employees for purposes of California’s wage order laws prior to Dynamex.”
On remand, the Ninth Circuit offered the district court guidance as to the merits of the case. It stated that Patterson v. Domino’s Pizza LLC (2014) 60 Cal.4th 474 — a case the district court cited in its original finding for Jan-Pro — is not applicable to the ABC test because Patterson wasn’t a wage and hour case. It also noted that although Jan-Pro operates with a three-tier franchise structure, the company could still be the plaintiffs’ employer under the ABC test even if it isn’t a party to any contract with the plaintiffs.
The court added that prong B of the ABC test — the factor requiring a worker to perform work outside the usual course of a hiring entity’s business in order to be classified as an independent contractor — “may be the most susceptible to summary judgment on the record already developed.”
The case is Vazquez v. Jan-Pro Franchising International Inc., case number 17-16096, in the U.S. Court of Appeals for the Ninth Circuit.
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