Not Even Cher Could Turn Back Time, But the Ninth Circuit Just Did; Dynamex Test Now Applies Retroactively in California

Clock independent contractor misclassification dynamex

In a mediocre and overplayed 1989 pop song, Cher sang about how she wished she could turn back time. If she could turn back time, according to the song, she’d take back those words that’ve hurt you and you’d stay.

The music video for “If I Could Turn Back Time” takes place on the deck of the battleship USS Missouri, which the U.S. Navy allowed because it believed the video could help boost recruitment. (How, exactly?) The song reached number one on the pop charts in Australia and Norway, causing me to question the collective judgment of the citizens of these otherwise fine nations.

As Cher well knew, you can’t turn back time. Doing so would cause all sorts of problems. As we will now see in California.

On May 2, the Ninth Circuit Court of Appeals ruled that California’s Dynamex decision (from April 2018) must be applied retroactively. In the Dynamex case, the California Supreme Court had ruled that a strict ABC Test should be used to determine whether workers are considered employees or independent contractors under California’s wage orders.

You can read more about the test here, but what’s most important for now is that the test is really hard to meet. That’s why in Vazquez v. Jan-Pro Franchising International, Jan-Pro argued that since it was being sued for events that took place before the Dynamex ruling, its lawsuit should be decided under the test that was used before the Dynamex ruling. Jan-Pro argued that the Dynamex decision made up new rules in the middle of the game, and Jan-Pro should not be held to the new, made-up rules for time periods before the new rules were made up.

That seems logical to me, but not to the Ninth Circuit. Instead, the Court of Appeals ruled that Dynamex must be applied retroactively. The Court’s reasoning makes little sense.

The Court based its decision on the general rule that new statutes are applied prospectively, but court decisions are applied retrospectively. That makes sense as a default rule — but only if the court decision is interpreting the text of a statute or is applying a well-known rule to a set of facts. 

The ABC Test was invented by the California Supreme Court in its April 2018 Dynamex ruling. That test did not exist in any California statute enacted by the legislature or in any regulation. Before the Dynamex case, no business in California had any reason to believe that an ABC Test was the test — especially since for decades a different test had been used. The Dynamex decision, therefore, was much more like the enacting of a new statute than the judicial interpretation of a long-standing law. 

In fact, the Ninth Circuit’s decision last week goes so far as to admit that the Dynamex decision was, in essence, the adoption by California’s Supreme Court of a Massachusetts statute that had never been passed by California’s legislature.  The Ninth Circuit ruling includes this sentence, which precisely demonstrates my point:  “Thus, by judicial fiat, California incorporated Massachusetts’ employment classification statute into its labor laws.” Before April 2018, Massachusetts had an ABC Test, by statute. California did not.

Judicial fiat! That quote says it all. Judicial fiat is when the judiciary (not the legislature) creates a new law. It is a term most commonly used to criticize a judicial decision as going too far and usurping the role of the legislative branch.  But here the Ninth Circuit concedes that’s what the California Supreme Court did in Dynamex.  Since the Dynamex decision adopted a Massachusetts statute by judicial fiat, then the only fair way to apply that rule is to treat it like a statute and apply it only prospectively. But no.

It seems blatantly unfair for a court to make up new rules by adopting a different state’s statute — one that California’s legislature never adopted — and then to hold California’s businesses liable for failing to comply with a set of rules that did not yet exist.

So, Todd, tell me how you really feel.

Anyway, that’s now the law in California. The ABC Test invented by California’s Supreme Court in the Dynamex court now applies when determining whether someone is an employee under California’s wage orders, even for time periods before the test was invented.

You can read more about the Dynamex decision here and here.

California business are being advised to consider moving to Australia.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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