The ABC Test: California State and Localities Support Plaintiffs’ Appeal, Signal Aggressive Enforcement 

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From Littler, James A. Paretti, Jr., Michael J. Lotito, and Bruce J. Sarchet discuss efforts to persuade the 9th Circuit Court of Appeals to reconsider its decision not to use the ABC test to determine if franchisor was liable for wage claims against a franchisee. James, Michael and Bruce write:

At the end of October, plaintiffs in the Salazar v. McDonald’s USA case urged the U.S. Court of Appeals for the Ninth Circuit to revisit its decision that the ABC test is intended for determining only whether a worker is misclassified as an independent contractor rather than an employee, and therefore has no bearing on questions of joint employment generally.  Earlier that month, the Ninth Circuit ruled in favor of the franchisor, and held that the ABC test, as adopted by the California Supreme Court in the Dynamex decision, could not be used by individual franchisee employees to hold the national franchisor liable for wage and hour violations alleged to have been committed by its franchisee.  In its Salazar ruling, the court relied on prior California case law much more deferential to the franchising model.  In their last filing with the court, plaintiffs asked the Ninth Circuit to revisit that decision, or, alternatively, to certify key questions of law to the California Supreme Court.

Last week, a series of briefs were filed in Salazar in support of the plaintiffs’ requests.  Employee advocates filed briefs, but perhaps more significant, both the state of California (specifically, its Division of Labor Standards Enforcement, which enforces state wage and hour laws), and the city attorneys for the cities of Oakland and San Francisco, filed papers in support of a rehearing or certification.  Both argued for a more expansive reading of Dynamex and a broader application of the ABC test than the Salazar court applied.  It is likely the Ninth Circuit will decide whether to rehear the case or certify questions of liability to the California Supreme Court in the near future.

The fact that city attorneys—who are granted broad enforcement authority under AB 5, when the bill becomes effective in January 2020—weighed in on this case suggests that they may be gearing up for aggressive enforcement of the new law as soon as it is applicable.  Indeed, already one city attorney has sought to impose liability for worker misclassification under the state’s unfair competition laws.

Read the full article at The ABC Test: California State and Localities Support Plaintiffs’ Appeal, Signal Aggressive Enforcement | Littler Mendelson P.C.

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