California Courts Declare Dynamex Ruling Applies Retroactively

In California, the state’s Court of Appeal came to the conclusion that the state’s Supreme Court Dynamex decision was to be applied retroactively. The original case from earlier in the year spun off into legislation known as the AB5 bill, which limits the use of classifying workers as independent contractors rather than employees by companies in the state. For those in the trucking and freight industry, it has been anything but well-received as protests have even been planned out in response to the legislation.

The fallout from the Court of Appeal’s decision outlines that employers who rely on independent contractors may now be subject to potential liability claims for wage and hour disputes based on a legal standard that did not exist before April 2018.

For Dynamex, the California Supreme Court brought on a new test to determine whether a worker is considered an employee or an independent contractor. The new test added two new requirements that an employer must meet to establish the worker is, in fact, an independent contractor. To no surprise, employers are arguing that the new standard should only be applied moving forward.

Regardless of how it’s applied, the legislation is causing confusion around how employers should provide or pursue getting commercial truck insurance. Commercial truck insurance has policy limits that apply to specified workers, and having different or fluid classifications is hard to grasp.

In another case in the state, Gonzales v. San Gabriel Transit, Inc., a transportation driver brought a class-action suit on behalf of himself and other freight drivers, expressing that they were misclassified as independent contractors rather than full-on employees. The issue on appeal zeroed-in on whether or not the claim was suitable for class action certification. And while the transit company in question didn’t bring up the issue on appeal, the Court of Appeal initially considered if the Dynamex rule applied retroactively.

In this case, the court concluded that the Dynamex decision indeed applied retroactively based on the fact that it did not establish a new standard. Employers now have potential risk exposure that goes back years now following the decision (the limit is four years as this is the maximum statute of limitations for wage and hour claims).

Now, trucking companies and professionals in the industry are looking to January 1, 2020, the date that the AB-5 bill, spun out from the Dynamex court decision, will take effect. The bill expands on Dynamex, applying the test to all claims coming out of the Labor Code of California. The difference being that the Dynamex decision has been seen as only applying to claims coming from California Wage Orders.

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