In Bellwether Gig Economy Case, Judge Rules Grubhub Driver Is Not an Employee
U.S. Magistrate Judge Jacqueline Scott Corley ruled that Grubhub properly classified a delivery driver as an independent contractor instead of an employee under California law.
February 08, 2018 at 06:15 PM
5 minute read
A magistrate judge chipped away at the uncertainty surrounding the status of gig-economy workers Thursday by ruling the delivery service Grubhub rightly classified a delivery driver as an independent contractor.
In the case, former Grubhub driver Raef Lawson sued the company, pursuant to the California Private Attorney General Act, alleging he was misclassified as an independent contractor instead of an employee entitled to minimum wage and other benefits. Following last fall's six-day bench trial in San Francisco, U.S. Magistrate Judge Jacqueline Scott Corley of the Northern District of California ruled Thursday that because Grubhub “exercised little control over the details” of the driver's work, Grubhub had properly classified him as an independent contractor.
The ruling is the first of its kind in the federal court in California. Workers have brought similar cases against companies like ride-hailing giants Lyft and Uber, but such challenges have yet to reach a conclusion in federal court.
“While some factors weigh in favor of an employment relationship, Grubhub's lack of all necessary control over Mr. Lawson's work, including how he performed deliveries and even whether or for how long, along with other factors persuade the court that the contractor classification was appropriate for Mr. Lawson during his brief tenure with Grubhub,” Corley wrote in her opinion.
Grubhub was represented by a team from Gibson, Dunn & Crutcher led by partner Michele Maryott, of the firm's Orange County office, and Los Angeles-based partners Ted Boutrous and Theane Evangelis.
“We are very pleased with today's ruling that the plaintiff was an independent contractor in light of the tremendous freedom and flexibility he enjoyed while using Grubhub's app,” Maryott said in a statement. “Delivery partners gravitate to Grubhub, rather than traditional employment, precisely because of the independence and autonomy they have over their workdays and over their businesses.”
Boston-based attorney Shannon Liss-Riordan of Lichten & Liss-Riordan, known for her representation of workers in other high-profile misclassification lawsuits, represented Lawson.
Liss-Riordan said she will appeal.
“Among other issues, the California Supreme Court is considering adopting a more protective test for employee status, so I was surprised the decision was issued before the Supreme Court has issued that decision,” she said in an email.
In her opinion, Corley wrote that in order to rule for Lawson, she would need to find that he had “the right to control the manner and means” of his work. She noted that Grubhub did not control the type of transportation Lawson could use to make his deliveries, his appearance when making the deliveries, or who could accompany him while completing his orders. Lawson also had control over whether and when he worked, and for how long, the judge wrote.
Corley added that some secondary factors of the employment relationship could support the conclusion that Lawson was an employee: Lawson's work was part of Grubhub's “regular business,” that the work was low-skilled, and Lawson “was not engaged in a distinct delivery business of which Grubhub was just one client.”
Still, the judge said the facts still established that Lawson was an independent contractor.
“If Mr. Lawson is an employee, he has rights to minimum wage, overtime, expense reimbursement and workers' compensation benefits. If he is not, he gets none,” the judge wrote. “With the advent of the gig economy, and the creation of a low wage workforce performing low skill but highly flexible episodic jobs, the legislature may want to address this stark dichotomy. In the meantime the court must answer the question one way or the other.”
Gina Roccanova, a principal at Meyers Nave Riback Silver & Wilson, said Corley's opinion is important because it can serve as a “roadmap” for companies on how to approach decisions about how much control to exert over independent contractors.
“Everybody knows what the factors are, but the way [the judge] analyzed them and the weight she gave to each of them, I thought, was well-explained.”
However, Roccanova noted that state courts in California, known for their pro-employee rulings, could reach a different conclusion in similar cases. The Ninth Circuit, she said, could also come out in favor of Lawson on appeal.
Roccanova added that Grubhub took a relatively hands-off approach in this case, not requiring Lawson to wear a uniform or undergo training. Other gig-economy companies that don't center around restaurant deliveries could have quite different rules when it comes to independent contractors, she said.
“Companies may not find the extent to which Grubhub kept its hands off this independent contractor workable,” Roccanova said. “That's not necessarily a business model that's going to work for companies where their public interface, and the manner in which that public interface occurs, is more important because they're customer-facing for more than two seconds.”
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