Dynamex Rules Retroactive? It's Back In The Hands Of A State Court

The question of whether the Dynamex ruling can be applied retroactively is being kicked backed to the California Supreme Court, where the Dynamex decision was first handed down.

In a short ruling with no further explanation, the U.S. Ninth Circuit Court of Appeals on Monday returned the question of whether Dynamex could be applied retroactively after earlier ruling that it could be implemented retroactively. The case in question is not the Dynamex case itself, which was adjudicated last year. Rather, it is the case of Vazquez v. Jan-Pro Franchising International, which also dealt with the question of whether a worker is a contractor or an employee.

Shannon Liss-Riordan, an attorney for the plaintiffs in the Jan-Pro case, said earlier rulings had first favored the defendants – a cleaning company – but the Ninth Circuit overturned that case on appeal. It was at that point that the appeal also included the ruling that the principles of the Dynamex case could be applied retroactively and would not just be in effect moving forward.

At the time that the Ninth Circuit made that ruling, two lawyers, Raymond Nhan and Eric Sohlgren, wrote on the JD Supra website that the court "reasoned that California law demands retroactive application, noting that statutes operate only prospectively, while judicial decisions operate retrospectively. The [California] Supreme Court did not give any indication that Dynamex was an exception to this general rule."

In an email to FreightWaves, Liss-Riordan did not offer a definitive reason why the Ninth Circuit would have thrown the question of whether Dynamex is retroactive back to the California Supreme Court. The request to have the ruling on retroactive enforcement was made by the defendants in the case, Jan-Pro Franchising.

"The California Supreme Court already declined last year a request to modify Dynamex to state it's not retroactive," she wrote in the email. "Still, defendants have continued to question whether it is so I welcome this opportunity for the Supreme Court to definitively put this question to rest."

Liss-Riordan also said that "every decision I'm aware of to date" had affirmed that the Dynamex provisions could be applied retroactively. "I believe the panel was correct in saying it is retroactive," she added, referring to the earlier ruling before the issue was put back on to the state's highest court..

According to the JD Supra website, in a post written by Baker Hostettler, the California Supreme Court has up to 90 days to decide whether to take the case.

At the heart of the Dynamex ruling in determining whether a worker is truly independent or should legally be considered an employee, the California Supreme Court ruled in April last year that a three-pronged test is to be used. The worker a) "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 b)  "the worker performs work that is outside the usual course of the hiring entity's business; and c) "the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed." All three of these tests must be met, according to the ruling. 

The trucking industry is pushing back against a move to codify the Dynamex decision into state law. In particular, it argues that the B provision of the ABC test – which is relabeled #2 in the legislation – would effectively end the owner-operator model in the trucking business.  That bill has passed the California Assembly as AB5 and is now awaiting action in the state's Senate.

Image sourced from Pixabay