Vazquez v. Jan-Pro Franchising International, Inc.
The ABC test announced in Dynamex applies retroactively — to every case not yet final when Dynamex was decided — exposing pre-2018 wage-order conduct to the new classification standard.
Vazquez v. Jan-Pro Franchising International, Inc. (2021) 10 Cal.5th 944
Misclassification
Independent Contractor
ABC Test
Retroactivity
Certified Question
Published
In brief. Answering a question certified by the Ninth Circuit, the Court held that its decision in Dynamex — adopting the ABC test for wage-order claims — “applies retroactively … to all cases not yet final as of the date” Dynamex was decided. Following the ordinary rule that judicial decisions operate retroactively, the Court found no sufficient reason for prospective-only treatment. The practical effect is significant pre-2018 exposure: hiring entities that relied on the older Borello standard for wage-order obligations may be measured against the ABC test for conduct within the limitations period. (Vazquez v. Jan-Pro Franchising International, Inc. (2021) 10 Cal.5th 944, 948.)
Facts
This case reached the California Supreme Court on a question of state law certified by the United States Court of Appeals for the Ninth Circuit. The underlying federal litigation arose from a franchising arrangement involving Jan-Pro Franchising International, Inc.; the plaintiff cleaning workers contended they had been misclassified as independent contractors rather than employees entitled to wage-order protections. The court emphasized, however, that the certified question “does not involve any inquiry into the general relationship or applicability of the Dynamex decision to franchise agreements or arrangements,” and it did not address that subject. (Vazquez, supra, 10 Cal.5th at p. 948.)
The sole issue before the court was whether its intervening decision in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 — which adopted the “ABC test” for determining employee status under the wage orders — applies retroactively to conduct predating that decision. (Ibid.) Jan-Pro urged an exception to the usual rule of retroactivity, arguing that before Dynamex it reasonably believed worker classification would be governed by the multifactor standard of S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. (Id. at pp. 948–949.)
Procedural history
The case was litigated in federal court. After Dynamex issued, the Ninth Circuit certified to the California Supreme Court the question whether Dynamex applies retroactively. The Court accepted the question and answered it. (10 Cal.5th at pp. 948–949, 958.)
Issue
Does the ABC test adopted in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 apply retroactively to cases that were pending — i.e., not yet final — when Dynamex was decided? (10 Cal.5th at p. 948.)
Holding
Yes. Dynamex “applies retroactively—that is, to all cases not yet final as of the date” the Dynamex decision became final. (10 Cal.5th at p. 948.)
Reasoning
1. The general rule of retroactivity. Judicial decisions ordinarily operate retroactively; prospective-only application is the exception, reserved for situations involving reasonable reliance on a contrary, settled rule that the new decision overturns. (10 Cal.5th at pp. 951–953.)
2. Dynamex resolved an unsettled question. Dynamex did not overrule a definitive prior holding so much as clarify the long-standing “suffer or permit to work” standard embedded in the wage orders; parties had no settled, contrary rule on which they could justifiably rely for the precise wage-order question Dynamex answered. (10 Cal.5th at pp. 953–957.) The Court found no due-process or fairness considerations sufficient to depart from the ordinary rule. (Id. at pp. 957–958.)
3. Scope of the answer. The Court confined itself to the certified retroactivity question and expressly did not resolve franchise-specific issues — such as how the ABC test applies to franchising arrangements or whether a franchisor is vicariously liable for a franchisee’s conduct. (10 Cal.5th at pp. 949, 955.)
Significance
Vazquez enlarged the reach of the gig-economy classification revolution by making Dynamex’s ABC test applicable to pre-2018 wage-order conduct within the limitations period, magnifying employer exposure across the economy. It sits squarely in the arc — Dynamex (ABC test) → Assembly Bill 5 (codification; Lab. Code, § 2775) → People v. Uber Technologies, Inc. (2020) 56 Cal.App.5th 266 (enforcement) → Proposition 22 / Castellanos v. State of California (2024) 16 Cal.5th 588 (carve-out and validation) — and remains a key tool for plaintiffs litigating older misclassification claims. See the Review’s practice guide on independent-contractor misclassification and the ABC test.
Key quotes
“[O]ur decision in Dynamex applies retroactively—that is, to all cases not yet final as of the date our decision in Dynamex [became final].” (Vazquez, supra, 10 Cal.5th at p. 948.)
Practice pointer
Use Vazquez to reach back: for wage-order misclassification claims, the ABC test governs conduct before Dynamex (April 2018) within the applicable limitations period, so pre-2018 arrangements are fair game. Plead the ABC theory (focusing on prong B) for that earlier conduct rather than conceding Borello. Note the open franchise questions Vazquez reserved, and confirm which limitations period and which statutory regime (pre- or post-AB 5) applies to the specific claim.
Open questions
The Court expressly reserved how the ABC test applies to franchising structures and whether a franchisor may be vicariously liable for a franchisee’s wrongdoing. (10 Cal.5th at pp. 949, 955.) The interplay between Vazquez’s retroactivity and the staggered effective dates and exemptions of Assembly Bill 5 / Assembly Bill 2257 also continues to generate disputes.