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Independent contractor test applies retroactively



The Supreme Court of California ruled in a ruling Thursday that the test for determining whether workers are employed or self-employed is retroactive.

In Vazquez v. Jan-Pro Franchising International Inc. ., The Court answered a question left unanswered by Dynamex Ops in April 2018 . W. Inc. v. Superior Court case, which instituted a new test to determine whether workers were independent contractors or employees under state law.

In May 2019, the 9th American Circuit Court Vazquez v. Jan-Pro Franchising Intl. that Dynamex was retroactive, causing employers to misclassify employees responsible for California Labor Code obligations such as overtime, minimum wage, reporting time, accounting, reimbursement of business expenses, meal and rest periods.

The Supreme Court of California agreed to hear the case and stated that it would not deviate "from the general rule that judicial decisions have retroactive effect."

According to Dynamex, an employer must establish each of the following to demonstrate that a worker is an independent contractor: (A) The employee is free from that employment unit's control and management in connection with performance and, in fact; (B) the employee performs work that is outside the employee's business. and (C) the worker engages in an independently established trade, profession or activity of the same nature as the work performed.

Jan-Pro argued that the court should make an exception to the general rule of retroactivity because it "could not have predicted that the difference between employees and independent contractors for the purpose of imposing a wage order would be governed by the ABC test", but the court rejected argument and concluded that Dynamex was applied retroactively to all cases not yet final from the date of the decision Dynamex .

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