diff --git a/src/DurableSDK/Commands/WaitDurableTaskCommand.cs b/src/DurableSDK/Commands/WaitDurableTaskCommand.cs
index fc0b3b48..9aad44da 100644
--- a/src/DurableSDK/Commands/WaitDurableTaskCommand.cs
+++ b/src/DurableSDK/Commands/WaitDurableTaskCommand.cs
@@ -34,7 +34,7 @@ protected override void EndProcessing()
             }
             else
             {
-                _durableTaskHandler.WaitAll(Task, context, WriteObject);
+                _durableTaskHandler.WaitAll(Task, context, WriteObject, onFailure: failureReason => DurableActivityErrorHandler.Handle(this, failureReason));
             }
         }
 
diff --git a/src/DurableSDK/DurableTaskHandler.cs b/src/DurableSDK/DurableTaskHandler.cs
index c65b1275..be0e9543 100644
--- a/src/DurableSDK/DurableTaskHandler.cs
+++ b/src/DurableSDK/DurableTaskHandler.cs
@@ -14,6 +14,8 @@ namespace Microsoft.Azure.Functions.PowerShellWorker.Durable
     internal class DurableTaskHandler
     {
         private readonly ManualResetEvent _waitForStop = new ManualResetEvent(initialState: false);
+        private bool enabledCompoundErrorPropagation { get; } =
+            PowerShellWorkerConfiguration.GetBoolean(Utils.PropagateCompoundErrorsEnvVariable) ?? false;
 
         public void StopAndInitiateDurableTaskOrReplay(
             DurableTask task,
@@ -102,11 +104,49 @@ public void StopAndInitiateDurableTaskOrReplay(
             }
         }
 
+        public static bool IsNonTerminalTaskFailedEvent(
+            DurableTask task,
+            OrchestrationContext context,
+            HistoryEvent scheduledHistoryEvent,
+            HistoryEvent completedHistoryEvent
+            )
+        {
+
+            if (task is ActivityInvocationTask activity && completedHistoryEvent.EventType == HistoryEventType.TaskFailed)
+            {
+                if (activity.RetryOptions == null)
+                {
+                    return false;
+                }
+                else
+                {
+                    Action<string> NoOp = _ => { };
+                    // RetryProcessor assumes events have not been processed,
+                    // it will re-assign the `IsProcessed` flag for these events
+                    // it its execution
+                    scheduledHistoryEvent.IsProcessed = false;
+                    completedHistoryEvent.IsProcessed = false;
+
+                    var isFinalFailureEvent =
+                        RetryProcessor.Process(
+                            context.History,
+                            scheduledHistoryEvent,
+                            activity.RetryOptions.MaxNumberOfAttempts,
+                            onSuccess: NoOp,
+                            onFinalFailure: NoOp);
+                    return !isFinalFailureEvent;
+                }
+            }
+            return false;
+        }
+
         // Waits for all of the given DurableTasks to complete
         public void WaitAll(
             IReadOnlyCollection<DurableTask> tasksToWaitFor,
             OrchestrationContext context,
-            Action<object> output)
+            Action<object> output,
+            Action<string> onFailure
+            )
         {
             context.OrchestrationActionCollector.NextBatch();
                 
@@ -127,6 +167,13 @@ public void WaitAll(
                 }
 
                 completedHistoryEvent.IsProcessed = true;
+
+                if (IsNonTerminalTaskFailedEvent(task, context, scheduledHistoryEvent, completedHistoryEvent))
+                {
+                    // do not count this as a terminal event for this task
+                    continue;
+                }
+
                 completedEvents.Add(completedHistoryEvent);
             }
 
@@ -142,6 +189,10 @@ public void WaitAll(
                     {
                         output(GetEventResult(completedHistoryEvent));
                     }
+                    if (completedHistoryEvent.EventType is HistoryEventType.TaskFailed && enabledCompoundErrorPropagation)
+                    {
+                        onFailure(completedHistoryEvent.Reason);
+                    }
                 }
             }
             else
@@ -175,6 +226,17 @@ public void WaitAny(
                     scheduledHistoryEvent.IsPlayed = true;
                 }
 
+                if (completedHistoryEvent == null)
+                {
+                    continue;
+                }
+
+                if (IsNonTerminalTaskFailedEvent(task, context, scheduledHistoryEvent, completedHistoryEvent))
+                {
+                    // do not count this as a terminal event for this task
+                    completedHistoryEvent = null;
+                }
+
                 if (completedHistoryEvent != null)
                 {
                     completedTasks.Add(task);
diff --git a/src/DurableSDK/Tasks/ActivityInvocationTask.cs b/src/DurableSDK/Tasks/ActivityInvocationTask.cs
index 6f54182c..cb2a3744 100644
--- a/src/DurableSDK/Tasks/ActivityInvocationTask.cs
+++ b/src/DurableSDK/Tasks/ActivityInvocationTask.cs
@@ -23,7 +23,7 @@ public class ActivityInvocationTask : DurableTask
 
         private object Input { get; }
 
-        private RetryOptions RetryOptions { get; }
+        internal RetryOptions RetryOptions { get; }
 
         internal ActivityInvocationTask(string functionName, object functionInput, RetryOptions retryOptions)
         {
diff --git a/src/Utility/Utils.cs b/src/Utility/Utils.cs
index e8d3a3d1..b34b1820 100644
--- a/src/Utility/Utils.cs
+++ b/src/Utility/Utils.cs
@@ -29,6 +29,7 @@ internal class Utils
         internal const string IsOrchestrationFailureKey = "IsOrchestrationFailure";
         internal const string TracePipelineObjectCmdlet = "Microsoft.Azure.Functions.PowerShellWorker\\Trace-PipelineObject";
         internal const string ExternalDurableSdkEnvVariable = "ExternalDurablePowerShellSDK";
+        internal const string PropagateCompoundErrorsEnvVariable = "PropagateCompoundErrors";
 
         internal readonly static object BoxedTrue = (object)true;
         internal readonly static object BoxedFalse = (object)false;
diff --git a/test/Unit/Durable/CurrentUtcDateTimeTests.cs b/test/Unit/Durable/CurrentUtcDateTimeTests.cs
index fca39599..096ce0a2 100644
--- a/test/Unit/Durable/CurrentUtcDateTimeTests.cs
+++ b/test/Unit/Durable/CurrentUtcDateTimeTests.cs
@@ -189,7 +189,7 @@ public void CurrentUtcDateTime_UpdatesToNextOrchestratorStartedTimestamp_IfAllAc
                 DurableTestUtilities.EmulateStop(durableTaskHandler);
             }
 
-            durableTaskHandler.WaitAll(tasksToWaitFor, context, output => allOutput.Add(output));
+            durableTaskHandler.WaitAll(tasksToWaitFor, context, output => allOutput.Add(output), _ => { });
             
             if (allCompleted)
             {
diff --git a/test/Unit/Durable/DurableTaskHandlerTests.cs b/test/Unit/Durable/DurableTaskHandlerTests.cs
index ef9ab809..f7f6d4f4 100644
--- a/test/Unit/Durable/DurableTaskHandlerTests.cs
+++ b/test/Unit/Durable/DurableTaskHandlerTests.cs
@@ -55,7 +55,7 @@ public void WaitAll_OutputsTaskResults_WhenAllTasksCompleted(
             var allOutput = new List<object>();
 
             var durableTaskHandler = new DurableTaskHandler();
-            durableTaskHandler.WaitAll(tasksToWaitFor, orchestrationContext, output => { allOutput.Add(output); });
+            durableTaskHandler.WaitAll(tasksToWaitFor, orchestrationContext, output => { allOutput.Add(output); }, _ => { });
 
             Assert.Equal(new[] { "Result1", "Result2", "Result3" }, allOutput);
             VerifyNoOrchestrationActionAdded(orchestrationContext);
@@ -88,7 +88,7 @@ public void WaitAll_OutputsNothing_WhenAnyTaskIsNotCompleted(
             DurableTestUtilities.EmulateStop(durableTaskHandler);
 
             durableTaskHandler.WaitAll(tasksToWaitFor, orchestrationContext,
-                                                           _ => { Assert.True(false, "Unexpected output"); });
+                                                           _ => { Assert.True(false, "Unexpected output"); }, _ => { });
 
             VerifyNoOrchestrationActionAdded(orchestrationContext);
         }
@@ -122,7 +122,7 @@ public void WaitAll_WaitsForStop_WhenAnyTaskIsNotCompleted(bool scheduledAndComp
                 expectedWaitForStop,
                 () =>
                 {
-                    durableTaskHandler.WaitAll(tasksToWaitFor, orchestrationContext, _ => { });
+                    durableTaskHandler.WaitAll(tasksToWaitFor, orchestrationContext, _ => { }, _ => { });
                 });
         }
 
@@ -242,7 +242,7 @@ public void WaitAll_And_WaitAny_StartNewActivityBatch(bool invokeWaitAll, bool i
             if (invokeWaitAll)
             {
                 durableTaskHandler.Stop(); // just to avoid the next call getting stuck waiting for a stop event
-                durableTaskHandler.WaitAll(new DurableTask[0], orchestrationContext, output: _ => {});
+                durableTaskHandler.WaitAll(new DurableTask[0], orchestrationContext, output: _ => {}, _ => { });
             }
 
             if (invokeWaitAny)