The California Supreme Court held yesterday that the ABC test announced in its landmark Dynamex decision – which makes it infinitely harder for businesses to classify workers as independent contractors – applies on a retroactive basis. This decision ended more than a year-and-a-half of waiting after the 9th Circuit Court of Appeals first held in May 2019 that the Dynamex test applied retroactively and then, a little less than three months later, withdrew its opinion and asked the California Supreme Court to decide the matter.
Just two months after 58% of Californians voted it into effect and not even one month after it became law of the state, a group of workers and a major union have filed suit to overturn the results of Proposition 22, the ballot measure that ensured that app-based rideshare and delivery drivers could be classified as independent contractors. The Service Employees International Union (SEIU) joined with a group of rideshare drivers to go straight to the California Supreme Court on January 12 and ask it to invalidate the new law as being unconstitutional and otherwise unenforceable.
If it had been released at some other point in time and under different circumstances, perhaps gig economy businesses would be celebrating the release of a federal rule that makes it easier to classify workers as independent contractors. But the fact that it wasn’t formalized until the waning days of the current administration means that the rule faces long odds of ever taking effect. We wrote about the rule in our Legal Alert that can be found here – feel free to check it out if you want the particulars of what the rule could bring to the table when it comes to establishing a worker classification standard. The Alert also provides details regarding the roadblocks the rule faces: the impending “midnight” memo to be released on January 20 that will temporarily freeze this rule and prevent it from taking effect on March 8 as planned; the probable litigation that will be filed to block the rule from taking effect on a permanent basis; an incoming administration that will almost certainly take additional steps to shelve the rule; and a possible replacement rule that would almost certainly be worker-centric. Add to that the recent news that Marty Walsh will soon head the Labor Department – his labor background makes it all but certain that he will oppose this rule – and you can see why it seems unlikely that the rule will ever become the law of the land.