by Michelle R. Ferber and Julie Ann Giammona
A California superior court judge in Orange County has concluded that the Dynamex case, which specifies a more stringent “ABC” test for determining independent contractor status, should be applied: (1) retroactively; and (2) to actions brought under the Private Attorney General Act (PAGA).
1. RETROACTIVE APPLICATION
Judge Claster held that the Dynamex case, which had taken over 13 years to reach the Supreme Court, should be applied retroactively because the Dynamex court “did not state that its decision applied only prospectively.” The judge also stated: “Given the age of the claims in the Dynamex case and given the Court’s long-standing acknowledgement of its authority to make such a statement . . . the lack of such a pronouncement suggests that the decision should apply retroactively . . . Although, not determinative, the Court’s later decision to deny requests to modify its decision to state that Dynamex will only be applied prospectively, supports this conclusion.”
Ferber Law will continue to monitor other pending cases, including a case before the Ninth Circuit which addresses the issue of retroactive application, and will keep our readers apprised.
2. PAGA
Although Judge Claster acknowledged that the holding of Dynamex only applies to enforcement of California Wage Orders, because violations of the California Labor Code (under which PAGA actions arise) “require compliance with the wage orders,” the judge ruled that the Dynamex test for independent contractor classification controls. Judge Claster stated:
“The court’s holding that the “ABC” test should be applied to determine employee status under the wage orders can only mean that that test also had to be applied to labor code claims seeking to enforce the wage order requirements,” the judge said. “The court concludes that the Dynamex “ABC” test should be utilized to determine the employee/independent contractor issues in this case. The fact that the case is brought under PAGA does not compel a different result.”
In sum, the ruling appears to be an attempt to expand the Dynamex holding by applying it to cases alleging violations of the Labor Code, not just violations of the Wage Orders. Interestingly, the judge did note that for purposes of gratuities, because the Labor Code definition of who qualifies as an employee is “arguably broader” than the definition found in the Wage Orders, the Dynamex analysis in determining issues relating to the gratuities would not apply.
Although the above ruling is troubling, it is important to remember that the ruling is just that: a ruling from one superior court judge in one county of California, with little if any precedential value. However, Ferber Law is not surprised by the retroactive application of Dynamex, and expects that moving forward, in the absence of legislative action, other courts will follow suit. We are hopeful, however, that other courts will keep the original limits of Dynamex and only apply the “ABC” test to cases arising under the Wage Orders, not the California Labor Code as Judge Claster did in this case.
As always, Ferber Law is available to respond to any of your employment concerns, particularly in this uncertain time of determining appropriate employee-independent contractor classification.
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.