Court Opinion

ID: 4651541
Source: CourtListenerOpinion
Date Created: 2021-01-14 18:02:27.184503+00
Date Added: 2024-06-11T08:01:39.479833
License: Public Domain

IN THE SUPREME COURT OF
               CALIFORNIA

                 GERARDO VAZQUEZ et al.,
                  Plaintiffs and Appellants,
                          v.
     JAN-PRO FRANCHISING INTERNATIONAL, INC.,
              Defendant and Respondent.

                           S258191

                        Ninth Circuit
                          17-16096

                Northern District of California
                     3:16-cv-05961-WHA

                      January 14, 2021

Chief Justice Cantil-Sakauye authored the opinion of the Court,
in which Justices Corrigan, Liu, Cuéllar, Kruger, Groban and
Humes* concurred.

________________________
*
   Administrative Presiding Justice of the Court of Appeal,
First Appellate District, Division One, assigned by the Chief
Justice pursuant to article VI, section 6 of the California
Constitution.
           VAZQUEZ v. JAN-PRO FRANCHISING
                INTERNATIONAL, INC.
                        S258191

         Opinion of the Court by Cantil-Sakauye, C. J.

      At the request of the United States Court of Appeals for
the Ninth Circuit, we agreed to decide the following question of
California law (see Cal. Rules of Court, rule 8.548): Does this
court’s decision in Dynamex Operations West, Inc. v. Superior
Court (2018) 4 Cal.5th 903 (Dynamex) apply retroactively?
      For the reasons set forth below, we conclude that Dynamex
does apply retroactively. In Dynamex, this court was faced with
a question of first impression: What standard applies under
California law in determining whether workers should be
classified as employees or independent contractors for purposes
of the obligations imposed by California’s wage orders? In
addressing that question, we concluded that under one of the
definitions of “employ” set forth in all California wage orders —
namely, to “suffer or permit to work” — any worker who
performs work for a business is presumed to be an employee who
falls within the protections afforded by a wage order. (Dynamex,
supra, 4 Cal.5th at p. 916.) We further held that such a worker
can properly be found to be “an independent contractor to whom
a wage order does not apply only if the hiring entity establishes:
(A) that the worker is free from the control and direction of the
hirer in connection with the performance of the work, both
under the contract for the performance of such work and in fact;
(B) that the worker performs work that is outside the usual
course of the hiring entity’s business; and (C) that the worker is

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     VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
            Opinion of the Court by Cantil-Sakauye, C. J.

customarily engaged in an independently established trade,
occupation, or business of the same nature as the work
performed for the hiring entity.” (Id. at pp. 916–917.) This
standard, also used in other jurisdictions to distinguish
employees from independent contractors, is commonly referred
to as the “ABC test.” (Id. at p. 916.)
      In concluding that the standard set forth in Dynamex
applies retroactively — that is, to all cases not yet final as of the
date our decision in Dynamex became final — we rely primarily
on the fact that Dynamex addressed an issue of first impression.
It did not change a settled rule on which the parties below had
relied. No decision of this court prior to Dynamex had
determined how the “suffer or permit to work” definition in
California’s wage orders should be applied in distinguishing
employees from independent contractors. Particularly because
we had not previously issued a definitive ruling on the issue
addressed in Dynamex, we see no reason to depart from the
general rule that judicial decisions are given retroactive effect.
      Defendant Jan-Pro Franchising International, Inc. asserts
that an exception to the general rule of retroactivity should be
recognized here. Defendant maintains that, prior to the
issuance of our decision in Dynamex, it reasonably believed that
the question of whether a worker should be classified as an
employee or independent contractor would be resolved under the
standard set forth in this court’s decision in S.G. Borello & Sons
v. Department of Industrial Relations (1989) 48 Cal.3d 341
(Borello). Borello addressed whether farmworkers hired by a
grower under a written “sharefarmer agreement” were
independent contractors or employees for purposes of the
workers’ compensation statutes. (Id. at p. 345.) The Borello
decision, however, did not address whether a worker should be

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

considered an employee or an independent contractor for
purposes of the obligations imposed by a wage order. Indeed,
twice in the last decade, we signaled that the test for
determining whether a worker should be classified as an
employee or independent contractor in the wage order context
remained an open question.       (Ayala v. Antelope Valley
Newspapers, Inc. (2014) 59 Cal.4th 522 (Ayala); Martinez v.
Combs (2010) 49 Cal.4th 35, 57–58 (Martinez).)
      Defendant additionally contends that it could not have
anticipated that the distinction between employees and
independent contractors for purposes of the obligations imposed
by a wage order would be governed by the ABC test that we
adopted in Dynamex. But defendant’s argument carries little
weight when, as here, the underlying decision changes no
settled rule. Moreover, public policy and fairness concerns, such
as protecting workers and benefitting businesses that comply
with the wage order obligations, favor retroactive application of
Dynamex. Thus, we do not view the retroactive application of
the ABC test to cases pending at the time Dynamex became final
as improper or unfair.
     Accordingly, in response to the question posed by the
Ninth Circuit, we answer that this court’s decision in Dynamex
applies retroactively.

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

           I. DYNAMEX’S INTERPRETATION OF THE
          SUFFER OR PERMIT TO WORK DEFINITION
         IN WAGE ORDERS APPLIES RETROACTIVELY
           TO ALL NONFINAL CASES GOVERNED BY
             SIMILARLY WORDED WAGE ORDERS
      As noted, the sole issue before this court is whether our
decision in Dynamex, supra, 4 Cal.5th 903, applies
retroactively.1
      We begin with a brief summary of the Dynamex decision.
In Dynamex, we faced the question regarding what standard
applies in determining whether, for purposes of the obligations
imposed by California’s wage orders, a worker should be
considered an employee who is covered and protected by the
applicable wage order or, instead, an independent contractor to
whom the wage order’s obligations and protections do not
apply.2 As we explained in Dynamex, all currently applicable
California wage orders, in defining the terms as used in the
wage orders, define the term “ ‘employ’ ” in part to mean “ ‘suffer

1
       Although the particular facts of the underlying federal
litigation in this case arise from a franchising arrangement, the
question of California law posed by the Ninth Circuit that we
agreed to answer does not involve any inquiry into the general
relationship or applicability of the Dynamex decision to
franchise agreements or arrangements, and we do not address
that subject.
2
       California’s wage orders were promulgated by the
Industrial Welfare Commission (IWC), the state agency charged
with fixing minimum wages, maximum hours of work, and
conditions of labor for various industries. (Brinker Restaurant
Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026.) Although
the Legislature defunded the IWC in 2004, its wage orders
remain in full force and effect. (Murphy v. Kenneth Cole
Productions, Inc. (2007) 40 Cal.4th 1094, 1102, fn. 4.)

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

or permit to work’ ” and define the term “ ‘ “employee” ’ ” to
mean “ ‘any person employed by an employer.’ ” (Dynamex,
supra, 4 Cal.5th at p. 926; see id. at p. 926 fn. 9.) At the same
time, we noted that the wage orders do not contain a definition
of the term “ ‘independent contractor’ ” nor any “other provision
that otherwise specifically addresses the potential distinction
between workers who are employees covered by the terms of the
wage order and workers who are independent contractors who
are not entitled to the protections afforded by the wage order.”
(Id. at p. 926.)
      After a lengthy review of prior relevant California
decisions (Dynamex, supra, 4 Cal.5th at pp. 927–942), we
described the variety of standards that “have been adopted in
legislative enactments, administrative regulations, and court
decisions as the means for distinguishing between those
workers who should be considered employees and those who
should be considered independent contractors.” (Id. at p. 950 &
fn. 20.) We explained that as early as 1937, the suffer or permit
to work standard embodied in California’s wage orders had been
described “as ‘the broadest definition’ that has been devised for
extending the coverage of a statute or regulation to the widest
class of workers that reasonably fall within the reach of a social
welfare statute.” (Id. at p. 951.) We took note of a number of
criticisms that had been advanced regarding several tests that
rely upon a “multifactor, ‘all the circumstances’ standard” for
distinguishing between employees and independent contractors.
(Id. at p. 954; see id. at pp. 954–956.) Thus, in part to avoid
these criticisms, we concluded in Dynamex that it is “most
consistent with the history and purpose of the suffer or permit
to work standard in California’s wage orders . . . to interpret
that standard as: (1) placing the burden on the hiring entity to

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

establish that the worker is an independent contractor who was
not intended to be included within the wage order’s coverage;
and (2) requiring the hiring entity, in order to meet this burden,
to establish each of the three factors embodied in the ABC test
— namely (A) that the worker is free from the control and
direction of the hiring entity in connection with the performance
of the work, both under the contract for the performance of the
work and in fact; and (B) that the worker performs work that is
outside the usual course of the hiring entity’s business; and (C)
that the worker is customarily engaged in an independently
established trade, occupation, or business of the same nature as
the work performed.” (Id. at pp. 956–957, fn. omitted.)
     Accordingly, this court’s decision in Dynamex was based
upon a determination concerning how the term “suffer or permit
to work” in California wage orders should be interpreted for
purposes of distinguishing between employees who are covered
by the wage orders and independent contractors who are not
protected by such orders.
      The Dynamex decision constitutes an authoritative
judicial interpretation of language — suffer or permit to work —
that has long been included in California’s wage orders to define
the scope of the employment relationships governed by the wage
orders. Thus, under well-established jurisprudential principles,
our interpretation of that language in Dynamex applies
retroactively to all cases not yet final that were governed by
wage orders containing that definition. (See Newman v.
Emerson Radio Corp. (1989) 48 Cal.3d 973, 978 (Newman) [“The
general rule that judicial decisions are given retroactive effect is
basic in our legal tradition”]; Waller v. Truck Ins. Exchange, Inc.
(1995) 11 Cal.4th 1, 24 (Waller) [“[T]he general rule [is] that
judicial decisions are to be applied retroactively”].) As the

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

United States Supreme Court observed in Rivers v. Roadway
Express, Inc. (1994) 511 U.S. 298, 312–313: “A judicial
construction of a statute is an authoritative statement of what
the statute meant before as well as after the decision of the case
giving rise to that construction.” In McClung v. Employment
Development Dept. (2004) 34 Cal.4th 467, 474, this court, after
quoting the foregoing passage from Rivers v. Roadway Express,
Inc., observed: “This is why a judicial decision [interpreting a
legislative measure] generally applies retroactively.” (See
Woolsey v. State of California (1992) 3 Cal.4th 758, 794 (Woolsey)
[“ ‘Whenever a decision undertakes to vindicate the original
meaning of an enactment, putting into effect the policy intended
from its inception, retroactive application is essential to
accomplish that aim’ ”].)
      As past cases have explained, the rule affirming the
retroactive effect of an authoritative judicial decision
interpreting a legislative measure generally applies even when
the statutory language in question previously had been given a
different interpretation by a lower appellate court decision.
Indeed, the United States Supreme Court’s decision in Rivers v.
Roadway Express, Inc., supra, 511 U.S. 298, quoted above,
involved just such a circumstance. In that case, the high court
held that its interpretation of a statutory term contained in the
1866 Civil Rights Act applied retroactively, notwithstanding the
fact that a line of prior federal appellate court decisions had set
forth a contrary interpretation.
      California decisions apply this same rule. In In re
Retirement Cases (2003) 110 Cal.App.4th 426, 441–454, for
example, the Court of Appeal held that the California Supreme
Court’s interpretation of a term in a pension statute in Ventura
County Deputy Sheriffs’ Assn. v. Board of Retirement (1997)

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

16 Cal.4th 483 applied retroactively, even though the Ventura
County decision explicitly rejected an earlier contrary
interpretation of the same statutory term by another appellate
decision in Guelfi v. Marin County Employees’ Retirement Assn.
(1983) 145 Cal.App.3d 297. In Woolsey, supra, 3 Cal.4th 758,
794, we reaffirmed the principle that “[t]he circumstance that
our decision overrules prior decisions of the Courts of Appeal
does not in itself justify prospective application.” We elaborated:
“An example of a decision which does not establish a new rule of
law is one in which we give effect ‘to a statutory rule that courts
had heretofore misconstrued [citation].’ ” (Ibid.) Such a decision
applies retroactively, we concluded, because there is no material
change in the law. (Ibid.)
      Dynamex presented a question of first impression
concerning how a wage order’s suffer or permit to work standard
should apply in the employee or independent contractor context.
In resolving that issue, our decision in Dynamex did not overrule
any prior California Supreme Court decision or disapprove any
prior California Court of Appeal decision. Thus, the well-
established general principle affirming the retroactive
application of judicial decisions interpreting legislative
measures supports the retroactive application of Dynamex.
                  II. NO EXCEPTION TO THE
                RETROACTIVITY OF DYNAMEX IS
                         JUSTIFIED
      Defendant argues that an exception to the general
retroactivity principle should be applied here because, prior to
Dynamex, businesses could not reasonably have anticipated that
the ABC test would govern at the time when they classified
workers as independent contractors rather than employees.
Defendant relies on past cases noting that “narrow exceptions

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

to the general rule of retroactivity [have been recognized] when
considerations of fairness and public policy are so compelling in
a particular case that, on balance, they outweigh the
considerations that underlie the basic rule.” (Newman, supra,
48 Cal.3d at p. 983; see, e.g., Williams & Fickett v. County of
Fresno (2017) 2 Cal.5th 1258, 1282; Claxton v. Waters (2004)
34 Cal.4th 367, 378–379.) This recognized exception arises
“ ‘when a judicial decision changes a settled rule on which the
parties below have relied.’ ” (Claxton, at p. 378; see also
Alvarado v. Dart Container Corp. of California (2018) 5 Cal.4th
542, 572 (Alvarado) [same]; Williams & Fickett, at p. 1282
[same]; Waller, supra, 11 Cal.4th at p. 25 [judicial decision
“clarif[ying]” the law applies retroactively].)
     In support of its position, defendant initially contends that
prior to Dynamex, it — assertedly like other California
businesses — reasonably believed that the question of whether
a worker should be considered an employee or an independent
contractor would be determined by application of the standard
set forth and applied in this court’s decision in Borello, supra,
48 Cal.3d 341.        Under these circumstances, defendant
maintains that it would be unfair to apply the ABC standard
adopted in the Dynamex decision, rather than the Borello
standard, to nonfinal cases that predate the Dynamex decision.
For the reasons discussed below, we disagree that an exception
to the general rule of retroactivity is warranted on this theory.
      To begin with, it is important to understand that
California’s wage orders have included the suffer or permit to
work standard as one basis for defining who should be treated
as an employee for purposes of the wage order for more than a
century.      (Martinez, supra, 49 Cal.4th at pp. 57–58.)
Additionally, at least since the 1930s, the suffer or permit to

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

work standard has been understood as embodying “ ‘the
broadest definition’ ” of employment for extending coverage of a
social welfare statute. (Dynamex, supra, 4 Cal.5th at p. 951; see
id. at pp. 950–951 [citing United States v. Rosenwasser (1945)
323 U.S. 360, 363, fn. 3, quoting language of then-Senator (later
United States Supreme Court justice) Hugo L. Black in
describing the incorporation of the suffer or permit to work
standard in the federal Fair Labor Standards Act as adopted in
1937].)
      Defendant contends that prior to Dynamex, a putative
employer would have reasonably anticipated that the question
whether a worker should properly be classified as an employee
or independent contractor for purposes of the obligations
imposed by an applicable wage order would be governed by the
Borello decision. But, as noted above, Borello was not a wage
order case and that decision did not purport to determine who
should be interpreted to be an employee for purposes of a wage
order. We resolved this question for the first time in Dynamex.
“Because the relevant portion of [the opinion] did not address an
area in which this court had previously issued a definitive
decision, from the outset any reliance on the previous state of
the law could not and should not have been viewed as firmly
fixed as would have been the case had we previously spoken.”
(Newman, supra, 48 Cal.3d at pp. 986–987; see also Alvarado,
supra, 4 Cal.5th at p. 573 [declining to limit holding to
prospective application when “defendant cannot claim
reasonable reliance on settled law”].) In Newman, we concluded
that our decision applied retroactively “even if one views [it] as
breaking new and unexpected ground, . . . [because] it did so in
an indisputably unsettled area.”         (Newman, at p. 987.)
Moreover, in two decisions following Borello, we expressly

                               10
    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

declined to decide the question of what standard applies in
determining whether workers should be classified as employees
or independent contractors in the wage order context. In
Martinez, decided eight years prior to Dynamex, this court
addressed the question regarding what standard should be
utilized in deciding whether an employment relationship existed
between the plaintiff workers and defendant business entities
for purposes of a potentially applicable wage order. Explaining
that no prior case had directly addressed the proper
interpretation of the relevant provisions of the wage order
relating to the terms “ ‘employ’ ” and “ ‘employer,’ ” we explicitly
held that the suffer or permit to work definition was one of three
alternative bases upon which an employment relationship could
be established for purposes of the obligations imposed by an
applicable wage order. (Martinez, supra, 49 Cal.4th at pp. 50,
64.)
      In Martinez itself, the controversy turned on whether, for
purposes of the obligations imposed by the wage order, the
plaintiff workers could properly be considered employees of
business entities other than the workers’ most direct or
immediate employer. Thus, Martinez did not present the
question of whether the workers were properly considered
employees or, instead, independent contractors for purposes of
the wage order. Yet we expressly signaled that this was an open
question, emphasizing that we were “not decid[ing]” in Martinez
whether “the decision in [Borello] has any relevance to wage
claims.” (Martinez, supra, 49 Cal.4th at p. 73.)
      In Ayala, supra, 59 Cal.4th 522, a case decided four years
prior to Dynamex, we explicitly noted that we had solicited
supplemental briefing from the parties concerning the possible
relevance of the tests for employee status set forth in the

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

applicable wage order in determining whether a worker was an
employee or an independent contractor for purposes of the wage
order. (Id. at p. 531.) Ultimately, our decision in Ayala did not
reach the issue upon which we had solicited supplemental
briefing, relying instead on the ground that in the trial court the
plaintiff employees in Ayala had relied solely on the Borello
standard, and we could resolve that case on that basis without
considering the wage order definitions of employment. (Ibid.)
Nonetheless, at the same time, our decision in Ayala explicitly
stated that “we leave for another day the question of what
application, if any, the wage order tests for employee status
might have to wage and hour claims such as these” (ibid.) —
namely, claims raising the question of whether workers should
properly be considered employees or independent contractors for
purposes of the obligations imposed by a wage order.
      In light of these passages in Martinez and Ayala,
employers were clearly on notice well before the Dynamex
decision that, for purposes of the obligations imposed by a wage
order, a worker’s status as an employee or independent
contractor might well depend on the suffer or permit to work
prong of an applicable wage order — and that the law was not
settled in this area. (See Newman, supra, 48 Cal.3d at p. 987
[explicit statements in previous decisions that this court was
expressly declining to decide an issue demonstrated that the
matter was “in flux” and “any reliance on the previous state of
the law could not and should not have been viewed as firmly
fixed”].) By “expressly declin[ing] to decide the issue, thereby
reserving our ultimate judgment on the question for some later
date,” we “ ‘highlighted the fact that this question remained to
be decided by this court.’ ” (Id. at p. 988, italics omitted.) Thus,
defendant’s reasonable reliance argument is unconvincing.

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

      Further, although defendant maintains that in classifying
its workers as independent contractors it reasonably relied on
the Borello standard, as this court explained in Dynamex, one of
the principal deficiencies of the Borello standard is its numerous
factors that must be weighed and balanced — and such a
standard effectively prevents employers and employees from
determining in advance how that classification will be resolved.
(Dynamex, supra, 4 Cal.5th at pp. 954–955.) Thus, as a practical
matter, defendant overstates the degree to which declining to
extend the Borello test to this context will impinge upon its
reasonable expectations. It is worth noting in this regard that
in Borello itself the agricultural workers were found to be
employees rather than independent contractors even though the
workers controlled the manner and details of their work,
including the hours that they worked.3 (Id. at p. 346.)
      Defendant further argues that even if it should have
reasonably anticipated that a worker’s designation as an
employee or independent contractor would depend upon the
application of a wage order’s suffer or permit to work definition,
it could not reasonably have anticipated that in Dynamex this
court would adopt the ABC test as the appropriate standard. We
reject the contention that litigants must have foresight of the
exact rule that a court ultimately adopts in order for it to have
retroactive effect.   And indeed, the ABC test articulated in

3
      Defendant also asserts that it relied on our decision in
Patterson v. Domino’s Pizza, LLC (2014) 60 Cal.4th 474.
Patterson addressed the propriety of imposing vicarious liability
on a franchisor for a franchisee’s wrongdoing, rather than the
question of what standard applies in determining whether
workers should be classified as employees or independent
contractors for purposes of California’s wage orders.

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

Dynamex was within the scope of what employers reasonably
could have foreseen. Prior decisions of this court had certainly
provided putative employers notice concerning the potential
breadth of the suffer or permit to work language. In Morillion
v. Royal Packing Co. (2000) 22 Cal.4th 575, 585 (Morillion), this
court noted that federal cases had interpreted that phrase to
apply when a putative employer “ ‘knows or should have
known’ ” that work is being performed on its behalf. (See id. at
pp. 584–585.) And in describing the scope of the suffer or permit
to work definition in Martinez, we stated that “[a] proprietor
who knows that persons are working in his or her business
without having been formally hired, or while being paid less
than the minimum wage, clearly suffers or permits that work by
failing to prevent it, while having the power to do so.” (Martinez,
supra, 49 Cal.4th at p. 69.) Moreover, the three elements of the
ABC test are prominent factors already listed in Borello, supra,
36 Cal.3d at page 351. Last, because Dynamex did not change a
previously settled rule, any reliance by the parties on the
previous state of the law is not particularly persuasive in our
retroactivity determination. (Newman, supra, 48 Cal.3d at
p. 986.) “At a minimum, litigants necessarily were aware that”
the employee/independent contractor distinction in the
applicable wage orders “was uncertain and yet to be definitively
established.” (Id. at p. 987.)
      It also bears noting that in Dynamex, this court
determined that “the suffer or permit to work definition is a
term of art that cannot be interpreted literally in a manner that
would encompass within the employee category the type of
individual workers, like independent plumbers or electricians,
who have traditionally been viewed as genuine independent
contractors who are working only in their own independent

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    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

business.” (Dynamex, supra, 4 Cal.5th at p. 916.) This was so,
we explained, because applying a broad “knows or should have
known” that work was being performed formulation in the
employee/independent contractor context would treat true
independent contractors as employees for purposes of the wage
order, when they could not reasonably have been intended to be
so treated. (Id. at pp. 948–950.) Accordingly, this court
harmonized the legislative intent to adopt the broadest
standard for determining who should be treated as an employee
for purposes of the wage order with the recognition that there
was no intention to bring classic independent contractors within
the reach of the wage orders. It was in this context that the
court in Dynamex concluded that it was appropriate to adopt the
ABC test as the standard for determining whether a worker
should properly be considered an employee or independent
contractor. (Id. at pp. 956–964.) We did not depart sharply from
the basic approach of Borello, even though a literal reading of
the suffer or permit to work definition would have swept far
more broadly. Thus, even if we were to give weight to
defendant’s reliance argument at this juncture, it bears
repeating that the test we ultimately adopted in Dynamex drew
on the factors articulated in Borello and was not beyond the
bounds of what employers could reasonably have expected.
      It is true that “we have long recognized the potential for
allowing narrow exceptions to the general rule of retroactivity
when considerations of fairness and public policy are so
compelling in a particular case that, on balance, they outweigh
the considerations that underlie the basic rule.” (Newman,
supra, 48 Cal.3d at p. 983.) In this case, however, fairness and
policy considerations underlying our decision in Dynamex favor
retroactive application. As we explained in Dynamex, the wage

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     VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
            Opinion of the Court by Cantil-Sakauye, C. J.

orders’ protections benefit workers by “enabl[ing] them to
provide at least minimally for themselves and their families and
to accord them a modicum of dignity and self-respect.”
(Dynamex, supra, 4 Cal.5th at p. 952.) The wage orders also
benefit “those law-abiding businesses that comply with the
obligations imposed by the wage orders, ensuring that such
responsible companies are not hurt by unfair competition from
competitor businesses that utilize substandard employment
practices.” (Ibid.) And, “the minimum employment standards
imposed by wage orders are also for the benefit of the public at
large, because if the wage orders’ obligations are not fulfilled the
public will often be left to assume responsibility for the ill effects
to workers and their families resulting from substandard wages
or unhealthy and unsafe working conditions.” (Id. at p. 953.)
Applying the interpretation of the suffer or permit to work
definition adopted in Dynamex only prospectively would
potentially deprive many workers of the intended protections of
the wage orders to which they may have improperly been
denied, as well as permit businesses to retain the unwarranted
advantages of misclassification.4 Last, because we have already
applied our decision in Dynamex retroactively — to the
Dynamex parties themselves — it would be unfair to withhold
the benefit of that decision to other similarly situated litigants.
      In sum, no “compelling and unusual circumstances
justify[] departure from the general rule” of retroactivity.
(Newman, supra, 48 Cal.3d at p. 983; Waller, supra, 11 Cal.4th

4
      Having concluded that our decision in Dynamex applies
retroactively, and having found no reliance or fairness
considerations weighing against the general rule that judicial
decisions apply retroactively, we likewise reject defendant’s
related due process challenge to retroactive application.

                                 16
    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

at p. 25 [rejecting argument against retroactivity because law in
question was “but a logical extension” of well-established
principles].) As we noted, Borello itself distinguished between
an employee and an independent contractor “by focusing on the
intended scope and purposes of the particular statutory
provision or provisions at issue.” (Dynamex, supra, 4 Cal.5th at
p. 934.) Given the longstanding definition of “employ” as to
suffer or permit to work in California’s wage orders, and the
unsettled nature of its application in the employee/independent
contractor context, we reject the contention that it is unfair to
putative employers to apply the ABC standard to work settings
that predate the Dynamex opinion. Indeed, we have routinely
applied our decisions interpreting wage orders retroactively,
even when the parties did not anticipate the precise
interpretation of such orders. (See, e.g., Frlekin v. Apple (2020)
8 Cal.5th 1038, 1057; Mendiola v. CPS Security Solutions, Inc.
(2015) 60 Cal.4th 833, 848, fn. 18.)
      Given the constraints imposed by the statute of
limitations, the retroactive application of Dynamex will in
practice affect a limited number of cases. Nonetheless, in light
of the general rule of retroactivity of judicial decisions and the
fundamental importance of the protections afforded by the wage
orders, we find no compelling justification for denying workers
included in such lawsuits the benefit of the standard set forth in
Dynamex.

                               17
    VAZQUEZ v. JAN-PRO FRANCHISING INTERNATIONAL, INC.
           Opinion of the Court by Cantil-Sakauye, C. J.

                       III. CONCLUSION
      In answer to the question posed by the Ninth Circuit, we
conclude that our decision in Dynamex applies retroactively to
all nonfinal cases that predate the effective date of the Dynamex
decision.
                                    CANTIL-SAKAUYE, C. J.

We Concur:
CORRIGAN, J.
LIU, J.
CUÉLLAR , J.
KRUGER, J.
GROBAN, J.
HUMES, J.*

________________________
*
   Administrative Presiding Justice of the Court of Appeal,
First Appellate District, Division One, assigned by the Chief
Justice pursuant to article VI, section 6 of the California
Constitution.

                               18
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Vazquez v. Jan-Pro Franchising International, Inc.
_________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding XXX on request pursuant to rule 8.548, Cal. Rules of Court
Review Granted
Rehearing Granted
__________________________________________________________________________________

Opinion No. S258191
Date Filed: January 14, 2021
__________________________________________________________________________________

Court:
County:
Judge:

__________________________________________________________________________________

Counsel:

Lichten & Liss-Riordan and Shannon Liss-Riordan for Plaintiffs and Appellants.

Nayantara Mehta; Cynthia L. Rice, Verónica Meléndez; Jennifer Reisch; Carol Vigne; Ellyn Moscowitz;
Rocio Alejandra Avila; and Jora Trang for National Employment Law Project, California Rural Legal
Assistance Foundation, Equal Rights Advocates, Legal Aid at Work, Legal Aid of Marin, National
Domestic Workers Alliance and Worksafe, Inc., as Amici Curiae on behalf of Plaintiffs and Appellants.

Olivier Schreiber & Chao, Monique Olivier; and Reynaldo Fuentes for California Employment Lawyers
Association and Partnership for Working Families as Amici Curiae on behalf of Plaintiffs and Appellants.

O’Hagan Meyer, Jeffrey M. Rosin; Willenken, Jason H. Wilson, Eileen M. Ahern and Amelia L.B. Sargent
for Defendant and Respondent.

Marron Lawyers, Paul Marron, Steven C. Rice and Paul B. Arenas for Taxicab Paratransit Association of
California as Amicus Curiae on behalf of Defendant and Respondent.

Arnold & Porter Kaye Scholer, James F. Speyer and Vanessa C. Adriance for California Chamber of
Commerce and the International Franchise Association as Amici Curiae on behalf of Defendant and
Respondent.

Horvitz & Levy, Jeremy B. Rosen, Peder K. Batalden and Felix Shafir for Chamber of Commerce of the
United States of America as Amicus Curiae on behalf of Defendant and Respondent.

Paul Hastings, Paul Grossman and Paul W. Cane, Jr., for California Employment Law Council and
Employers Group as Amici Curiae on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):

Shannon Liss-Riordan
Lichten & Liss-Riordan, P.C.
729 Boylston Street, Suite 2000
Boston, MA 02116
(617) 994-5800

Jason H. Wilson
Willenken LLP
707 Wilshire Blvd., Suite 3850
Los Angeles, CA 90017
(213) 955-9240