California Court Rules ABC Employment Test Retroactive

Last week, the California Supreme Court issued a ruling announcing that the “ABC test” to determine whether a worker is an independent contractor or employee is retroactive. This opinion issued by the highest court in the state has the potential to substantially impact many workers across California and could mean that you are entitled to back pay, benefits, and more from your employer. To learn more about how this ruling could impact your employment status, call or contact an experienced California employment law attorney today.

What is the ABC Test?

Also known as law AB 5, the ABC test was established in 2018 during the Dynamex Operations West, Inc. v. Superior Court case. The test places the onus on California employers to prove that their independent contractors are not actually employees. In order to classify a worker as an independent contractor, all of the following must be true: 

• The independent contractor is free from the control and direction of the employer in connection with the performance of the work, both under the contract for the performance of such work and in fact,
• The independent contractor performs work that is outside the usual course of the employer’s business, and
• The independent contractor is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed by the employer.

Additions to AB 5 carved out industry exceptions to this rule for workers like freelance journalists and rideshare drivers, but if an independent contractor in a covered industry is determined to be an employee under the ABC test they are entitled to potential back pay, overtime pay, health insurance benefits, other benefits, and more.

Retroactive Ruling

The current opinion issued by the California Supreme Court is a continuation of the original Dynamex case, which was first appealed to the California Court of Appeals. They issued a ruling on the case that stated the rule applied retroactively, then withdrew its ruling and asked the California Supreme Court to render an opinion. The state supreme court agreed with the lower court’s initial ruling that the ABC test should apply retroactively to workers. They dismissed the assertion that an exception should apply to existing workers, stating that the ABC test was reasonably within the scope of what employers could have foreseen and that prior labor and employment decisions in the state had put employers on notice that the ABC test was forthcoming.

This ruling has the potential to substantially impact workers deemed independent in covered industries. However, there is only a three-year statute of limitations on claims, which is why you should speak with an employment law attorney as soon as possible.

Call or Contact a Lawyer Now

Do you work in an area that may be independent contracting or full time employment? If so, you may be entitled to back pay and benefits retroactively under the new ruling on the ABC test in California. To learn more about your legal options, call or contact a knowledgeable employment law attorney in your area today.