Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 23 more than mere capability to engage in an independent business”; rather, part C requires evidence that the plaintiff “in fact provided services for other entities ‘independently” of his relationship with [the defendant].”106 3. Retroactivity of Dynamex: Vazquez v. Jan-Pro Franchising International, Inc. and Gonzales v. San Gabriel Transit In Vazquez v. Jan-Pro Franchising International, Inc.,107 the Ninth Circuit dealt another blow to California businesses, holding that Dynamex applies retroactively and that the ABC test of employee status applies in the franchisor-franchisee context. However, soon after it issued Vazquez, the Ninth Circuit withdrew the opinion and certified the retroactivity question to the California Supreme Court.108 The withdrawal of Vazquez was welcome news to franchisors, as the Ninth Circuit’s opinion was criticized for failing to consider the unique aspects of the franchisor-franchisee relationship. In its now-withdrawn opinion, the Ninth Circuit based its conclusion that Dynamex was retroactive on the fact that the California Supreme Court had stated that it was a “clarification” of existing law and not a change to the law.109 The California Court of Appeal reached the same conclusion in Gonzales v. San Gabriel Transit, Inc.110 In early 2021, the California Supreme Court issued its opinion agreeing with the Ninth Circuit and California Court of Appeal that Dynamex applies retroactively.111 The Supreme Court noted that twice in the last decade it had signaled that the test for determining whether a worker should be classified as an employee or independent contractor remained uncertain and thus employers’ reliance on Borello was misplaced.112 As a result, California employers will continue to feel the cost of the Supreme Court’s holding on retroactivity of Dynamex for years to come.113 C. Addition of the ABC Test to the Labor Code Soon after Dynamex, the California Legislature passed legislation to codify and expand the ABC test. AB 5, enacted in 2019, extended the ABC test to all claims under the California Labor Code, Unemployment Insurance 106 Id. at 575. 107 923 F.3d 575 (9th Cir. 2019), reh'g granted, opinion withdrawn, 930 F.3d 1107 (9th Cir. 2019), and on reh'g, 939 F.3d 1045 (9th Cir. 2019), certified question answered, 10 Cal.5th 944 (2021), and opinion reinstated in part on reh'g, 939 F.3d 1050 (9th Cir. 2019). 108 Vazquez v. Jan-Pro Franchising Int'l, Inc., 939 F.3d 1045, 1049 (9th Cir. 2019), certified question answered, 10 Cal. 5th 944, 478 P.3d 1207 (2021) (“In light of the foregoing, we ask the California Supreme Court to answer the following question: Does Dynamex Operations West Inc. v. Superior Court, 4 Cal.5th 903, 232 Cal.Rptr.3d 1, 416 P.3d 1 (2018), apply retroactively?”) 109 Vazquez, 923 F.3d at 588 (9th Cir. 2019), reh'g granted, opinion withdrawn, 930 F.3d 1107 (9th Cir. 2019), and on reh'g, 939 F.3d 1045 (9th Cir. 2019), certified question answered, 10 Cal.5th 944 (2021), and opinion reinstated in part on reh'g, 939 F.3d 1050 (9th Cir. 2019). 110 40 Cal. App. 5th 1131 (2019), review granted (Jan. 15, 2020), review dismissed, cause remanded sub nom. Gonzales v. San Gabriel Transit, 481 P.3d 1144 (Cal. 2021). 111 Vazquez v. Jan-Pro Franchising Int'l, Inc., 10 Cal. 5th 944, 948 (2021). 112 Id. at 949. 113 See, e.g., Parada v. E. Coast Transp. Inc., 62 Cal. App. 5th 692, 696 (2021) (reversing judgment in favor of employer in light of the “[California] Supreme Court’s decision in Vaszquez”).
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