396 | 2023 Cal-Peculiarities ©2023 Seyfarth Shaw LLP www.seyfarth.com An early—and especially disappointing—application of Dynamex came in Garcia v. Border Transportation Group, LLC.30 Garcia reversed a summary judgment against Wage Order claims by a taxi driver who alleged that Border Transportation had misclassified him as an independent contractor. Garcia held that, for purposes of seeking summary judgment, Border had failed to satisfy part C of the ABC test. Garcia stated that Dynamex adopted a “stringent” version of part C, requiring “an existing, not potential, showing of independent business operation.” The plaintiff taxi driver, in signing up with Border, had obtained a driver’s permit that was limited to work for Border, and California’s stringent part C “requires 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 or otherwise established a business ‘independent’ of his relationship with [the defendant].”31 It gets still worse for California businesses: Dynamex applied retroactively. One might think that, as a matter of due process, Dynamex would apply prospectively only, as businesses lacked fair notice that the Supreme Court would radically rewrite the law of independent contracting. Although Dynamex itself applied its ruling retroactively, there was a serious question as to whether the Dynamex ABC rule would affect others on a retroactive basis.32 Some early bad news for businesses came in a 2019 Court of Appeal decision holding that the ABC test applies to pending litigation and not only to claims brought under the Wage Orders, but also to Labor Code claims rooted in one or more Wage Orders or predicated on conduct alleged to have violated a Wage Order.33 The California Supreme Court granted review of the decision, to consider the Dynamex retroactivity issue in connection with its acceptance of that issue from the Ninth Circuit in another pending case.34 In that referral from the Ninth Circuit, the Supreme Court, in Vazquez v. Jan-Pro Franchising Int’l, Inc.,35 issued its unanimous decision on January 14, 2021. The result was a resounding disappointment for the business community. Reflecting the implicit anti-business bias that makes California peculiar, the Supreme Court dismissed the widespread employer concern that, before Dynamex, the question whether a worker was properly classified as an independent contractor are decided by applying the standards set forth in the Supreme Court’s Borello decision. But no, said the Supreme Court. Borello arose under the Labor Code while Dynamex arose under a Wage Order, whose definition of employment includes the “suffer or permit to work” test. Here the Supreme Court relied on its own vague statements in two prior cases (Martinez and Ayala) to justify having employers bear the brunt of uncertainty now: “employers were clearly on notice well before the Dynamex decision that, for purposes of the obligations imposed by a wage order, a workers’ status as an employee or independent contractor might well depend on the suffer or permit to work prong of an applicable wage order—and that the law was not settled in this area.”36 According to the Supreme Court, “the test we ultimately adopted in Dynamex drew on the factors articulated in Borello and was not beyond the bounds of what employers could reasonable have expected.”37 And the Supreme Court concluded that applying Dynamex “only prospectively would potentially deprive many workers of the intended protections of the wage orders to which they may have improperly been denied.”38 19.7 The codification and extension of Dynamex in AB 5 During 2019 California enacted Assembly Bill 5, which codified the Dynamex decision’s ABC test and extended it to contexts beyond the Wage Orders, including workers’ compensation, unemployment insurance, disability insurance, and Labor Code claims such as for expense reimbursement under section 2802.39 AB 5 itself did not impose retroactive liability for misclassification, but the California Supreme Court thereafter decided that, regardless of AB 5, the ABC test is retroactive. (See § 19.6.). California government officials, in People v. Uber, sued ride-share companies for a preliminary injunction against their classifying California drivers as independent contractors. The trial court granted the requested relief because the People had shown a reasonable probability—indeed, “an overwhelming likelihood”—of prevailing on the merits of the claim that the ride-share companies were misclassifying drivers as independent contractors in violation of AB 5. In 2020 the Court of Appeal affirmed, holding that the trial court did not abuse its discretion in
RkJQdWJsaXNoZXIy OTkwMTQ4