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California Courts Cast Considerable Doubt on Continued Use of “Independent Contractors

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The California Supreme Court last year set forth a revolutionary new “ABC test for determining whether workers are properly classified as employees or independent contractors, making it dramatically more difficult for California employers to lawfully retain independent contractors. On May 2, 2019, in Vazquez v. Jan-Pro Franchising Intl, Inc., the Ninth Circuit Court of Appeals determined that the Supreme Court of Californias landmark “ABC decision, Dynamex Ops. West Inc. v. Superior Court, 4 Cal. 5th 903 (2018), applies retroactively. In applying Dynamex retroactively, the Ninth Circuit noted the “default rule that judicial decisions have retroactive effect, and reasoned that Dynamex did not fall into an exception under California law for decisions that “change[d] a settled rule on which the parties below have relied. Vazquez, slip op. at 23. The Ninth Circuit also found persuasive that the Supreme Court of California summarily denied the defendants petition for review in Dynamex, which “strongly suggested that the usual retroactive application, rather than the exception, should apply to its newly announced rule. The Ninth Circuit also concluded that retroactive application of Dynamex did not violation constitutional due process but instead served the remedial purposes of the wage orders. Join us for a lively discussion of the changing legal landscape, and learn why all California businesses that use the services of independent contractors should consult counsel and audit their contractor practices in light of Dynamex and Vasquez.

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