The California Supreme Court should decide whether its ruling that created a strict test to determine whether a worker is an independent contractor should apply retroactively, a federal appeals court in San Francisco said.

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit withdrew its ruling July 22 in Vazquez v. Jan-Pro Franchising Int’l Inc. and asked the state Supreme Court instead to take up the question.

The California high court last year in Dynamex Operations West, Inc. v. Superior Court created a three-factor legal test that must be met before an employer can classify a...