MCLE Self-Study: VAZQUEZ’S RETROACTIVITY HOLDING CREATES UNINTENDED CONSEQUENCES FOR INDEPENDENT CONTRACTORS

By Paul Marron and Steven C. Rice

Paul Marron founded Marron Lawyers in 1995. The Firm defends Final Mile companies nationally in misclassification of independent contractor class actions and regulatory matters. Mr. Marron leads a nine-lawyer team. The Firm has tried to verdict wins in court and regulatory misclassification cases for groups as large as 1500 drivers throughout the United States. He represented Taxicab Paratransit Association of California as amicus curiae on behalf of defendant and respondent in Vazquez v. Jan-Pro Franchising Int’l. Steven C. Rice has been a civil litigator and trial lawyer in California since 1983. and has been with Marron Lawyers since 2008. He represents numerous companies involved in the transportation of passengers and goods, and he has briefed and argued misclassification in appellate courts. Mr. Rice represented Taxicab Paratransit Association of California as amicus curiae on behalf of defendant and respondent in Vazquez v. Jan-Pro Franchising Int’l. He received his B.A. from Harvard University and J.D. from UC Davis. The authors can be contacted at srice@marronlaw.com, (562) 432-7422.

In its limited ruling in Vazquez v. Jan-Pro Franchising International,¹ the California Supreme Court ordered its Dynamex ABC test² to be applied retroactively to claims alleging misclassification of independent contractors under state wage orders. The Court thus "doubled down" on its position that this new test was simply an interpretation of the words "suffer or permit to work," as used in the orders. At the same time, the Court paradoxically acknowledged that this language had not changed for "more than a century," and had never before been held to require deviation from a standard "common law" analysis.³

Businesses now must face liabilities and penalties for not classifying contractors according to a test that the Court had not yet devised. Even more significantly for the long term, the Court missed an opportunity to address the inappropriately broad application of its ABC test, including the Ninth Circuit’s own Vazquez decisions,⁴ to long-established, entrepreneurial business systems, including franchises. Instead, the Court chose to "suffer or permit" misapplications which could make it increasingly difficult for truly entrepreneurial individuals and businesses to escape the fate of being deemed mere "employees."