GrubHub Is Latest Gig Economy Company to Defend Business Model in Court

GrubHub Is Latest Gig Economy Company to Defend Business Model in Court

In a San Francisco courthouse, US Magistrate Judge Jacqueline Scott Corley recently heard closing arguments in a case brought against GrubHub by former food delivery driver Raef Lawson, challenging the platform’s gig economy business model and claiming protections for drivers as employees under California law. Corley’s ruling in this case is highly anticipated, as she will be the first US judge to weigh in on whether gig economy workers like Lawson have a right to those protections—while Uber and Lyft have both faced similar lawsuits, both of the ride-sharing platforms settled these disputes out of court.

Lawson is represented by Shannon Liss-Riordan, the same Boston-based attorney who pressed the cases of the Uber and Lyft drivers and is also challenging the independent contractor status of gig economy workers at other platforms. SF Gate’s Joel Rosenblatt looked in on the GrubHub case last week:

As the first case of its kind in the U.S., the GrubHub trial “will inevitably be treated as a bellwether,” said Charlotte Garden, an associate law professor at Seattle University. “That’s especially true because the lawyers in this case are also involved in other larger and higher profile misclassification cases, including the Uber case,” said Garden, who has followed the Uber litigation closely.

The question of whether Lawson is an employee turns on how much control Corley determines that GrubHub exerts over the work life of its drivers. The company, which competes with Uber in restaurant food delivery, argues that Lawson decided when, where and how frequently he performed deliveries.

In court Monday, Corley said the company’s power to terminate Lawson for any reason is of “inordinate” importance in her decision. The judge said GrubHub has the “heavy burden” of proving that the “at-will” terms of employment don’t mean it controls the relationship.

Liss-Riordan argued that GrubHub exercises considerable control over drivers, such as expecting them to be available for assignments and remain in designated geographical areas during shifts they sign up for and to remain in geographical areas, and that it owes drivers expense reimbursement, overtime, and a guaranteed minimum wage. If Corley buys her argument and rules that Lawson was misclassified as a contractor, he can file a case on behalf of other California GrubHub drivers through the state’s Private Attorneys General Act.

Again, this case is significant because it will produce the first federal court ruling on the question of gig economy worker classification. While the National Labor Relations Board has gone after companies like Handy and Postmates (whose workers are also represented by Liss-Riordan), US employment law currently fails to account for the precise circumstances of these workers, which Secretary of Labor Alexander Acosta wants to fix. The GrubHub case will likely be the first of many lawsuits that shape (or throw into disarray) the gig economy in the US until Congress makes legislative reforms.