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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Going Mobile? DOL Endorses Independent Contractor Model for Virtual Marketplace Apps

Opinion letter mobile app

Long before mobile apps were a thing, Pete Townsend and The Who were already going mobile. In the 1971 song, Townsend sings about the virtues of life on the open road, living in a mobile home. I’m an air-conditioned gypsy.

In an important opinion letter released this week, the DOL went mobile too, lending support to businesses in the “on-demand” or “sharing” economy. The letter is the first significant ruling that supports independent contractor status for service providers who obtain work through virtual marketplace apps.

A virtual marketplace app is a matchmaking service. It connects consumers who need a service (driving, housekeeping, handyman, anything) with service providers who do the work. Virtual marketplace companies (VMCs) are frequently the target of misclassification claims. In these types of claims, service providers — and the plaintiffs’ lawyers who love them — file lawsuits claiming that the service providers are really employees of the VMC. Frequent targets have been Uber, Lyft, Doordash, and Grubhub.

In Monday’s letter, the DOL opined that service providers are indeed independent contractors of the VMC, not its employees, at least under the facts of this particular case. The letter does not identify the specific VMC at issue, but the facts in the letter are going to be generally applicable to lots of VMCs.

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Slip Slidin’ Away? Truckers’ Fall Short in Bid to Overturn California’s Dynamex Standard (Plus: Bonus Quiz for Paul Simon Fans)

Truckers Western States dynamex independent contractor misclassificationIt seems a little presumptuous that when Paul Simon released the single, “Slip Slidin’ Away,” he released it as one of two new songs on his 1977 Greatest Hits, Etc. album. How is it a greatest hit before it’s been released? But sure enough, the song rose to #5 on the Billboard charts. Today’s Challenge: Ten bonus points will be awarded to anyone who can name the other new song that debuted on Simon’s 1977 Greatest Hits, Etc. compilation. The answer is at the end of the post.

In July, we wrote about “Convoy,” a 1975 song about a fictional trucker rebellion, as a way to introduce a new lawsuit filed by the Western States Trucking Association. The lawsuit seeks to invalidate California’s burdensome ABC Test (the Dynamex test), which is now used to determine who is a contractor and who is an employee under California wage and hour law.  The truckers argued that the law — as applied to truckers — was preempted by federal laws that seek to promote uniformity in the interstate transportation industry.

Based on a recent decision in a California federal court, the truckers’ hopes of invalidating Dynamex may be Slip Slidin’ Away.

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“This is a Cabinet”: DOL Proposes New Definition of Joint Employer, Seeks to Clear Up a Confusing Label

This post was originally published as a BakerHostetler Employment Alert on April 3, 2019. Cabinet joint employmentSometimes it’s obvious what something is, and you don’t need a label. Other times it’s not so obvious, and you do need a label. Then there’s the rare instance when it’s obvious what something is, but someone feels compelled to supply a label anyway. That third scenario is what I saw when I went to my daughter’s volleyball tournament last weekend and snapped this photo of a cabinet in the lobby. The label is small, but if you look closely, you’ll see that it helpfully declares the item to be a “cabinet.” It further announces, in red handwriting, that the item has been “sold,” thereby allaying my concerns that my daughter was spending her Saturday playing volleyball in a den of cabinet thieves.

The second scenario – label needed – is the focus of this Alert. And the territory is familiar ground ‒ joint employment.

It’s rarely obvious what that phrase means, and companies that use workers supplied by other companies have been seeking clarity for some time now. Ignoring Ronald Reagan’s famous quip about the nine most terrifying words in the English language, the Department of Labor (DOL) announced on Monday that it’s here to help.

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Too Many Beef Livers? NLRB Addresses How It Will Review 29,000 Comments on Its Proposed Joint Employer Rule

NRLB Ring too many beef livers avocadosToo much of a good thing can be a bad thing. For example, according to this article in Popular Science, consuming 240 avocados in one sitting would put the average man at risk of sudden death by potassium poisoning. (It doesn’t say how many avocados an above-average man could eat, but presumably the number is similar.) 

A similarly bad outcome can result from over-consumption of beef livers, although it would take approximately 431 pounds of beef livers before the toxicity of excessive vitamin A might cause a man to think he should have stopped after 430.

Lots of comments can overwhelm an administrative agency’s internal organs as well. As we discussed here, the NLRB has proposed a new regulation that would make it harder to establish joint employment under the National Labor Relations Act. In response to the Notice of Proposed Rulemaking, the Board has received nearly 29,000 comments from interested organizations, unions, academics, business owners and individual workers (like Cindy, perhaps) about the proposed new rule.

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We’ve Got Baby Steps Toward a New Definition of Joint Employment Under the FLSA.

Baby steps joint employment FLSA new rule

I still don’t know what this is, but I got it from Wikipedia.

According to Wikipedia, which knows everything, or thinks it does, Baby Steps is the name of a Japanese manga series by Hikaru Katsuki. I have no idea what that means, but apparently it’s a story of some sort, which I infer from the following description: “The story is centered on Eiichirō Maruo, a first year honor student who one day decides that he is lacking exercise.”

This does not make me want to watch it.

I will, however, be watching the baby steps being taken by the Department of Labor’s Wage and Hour Division (WHD). On February 28, the WHD submitted a proposed new rule on joint employment to the White House Office of Information and Regulatory Affairs (OIRA). The new rule would modify the meaning of “joint employment” under the Fair Labor Standards Act (FLSA), which is the federal law governing minimum wage and overtime requirements.

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Which States Are Trying to Kill “Independent Contractors” to Death? (Hint: One Rhymes with Schmalifornia)

Man Killed to Death - independent contractor misclassification

Only 4:34 am and already it’s gonna be a long day in the newsroom.

The tests for Independent Contractor vs. Employee vary state-by-state, law-by-law.

In some states, it’s particularly hard to show that an independent contractor relationship is real. These states want to call everyone an employee, even if the parties have agreed to classify the relationship as an independent contractor relationship. When it comes to independent contractor classification, these are the states that are killing it to death.

Like the poor guy who was the subject of this local news story. Getting killed to death — that’s gotta be one of the worst ways to die.

The Top Three Hardest States to Be Independent Contractors, from my vantage point, are: Continue reading