GrubHub Prevails in Contractor Classification Suit

GrubHub Prevails in Contractor Classification Suit

US Magistrate Judge Jacqueline Scott Corley issued her ruling on Thursday in a case brought against GrubHub late last year by former food delivery driver Raef Lawson, who claimed that the company’s gig economy business model had violated his rights as an employee under California law. Corley was not persuaded, however, by Lawson’s argument that GrubHub exerted enough control over when and how he worked for him to qualify as an employee and instead found that the company was correct to treat him as an independent contractor, TechCrunch’s Megan Rose Dickey reports:

A key element of the case centered around the Borello test, which looks at circumstances like whether the work performed is part of the company’s regular business, the skill required, payment method and whether the work is done under supervision of a manager. The purpose of the test is to determine whether a worker is a 1099 contractor or a W-2 employee.

On the basis of the Borello standard, Corley concluded that “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.” She also expressed concerns over Lawson’s honesty, noting that he misrepresented his education in his résumé and “intentionally manipulated the app to get paid for not working,” undermining the credibility of his testimony.

Being the first to weigh in on whether gig economy workers enjoy rights as employees, Corley’s ruling could set a precedent with implications for other gig economy companies. However, as Dickey notes, the judge hesitated to cast her ruling as dispositive with regard to the gig economy as a whole:

In the trial’s closing arguments back in October, Judge Corley noted that there was a lot of evidence, a lot of law and “it’s a unique situation.” She also mentioned that she doubts her decision “will be the last word.” In her conclusion today, Judge Corley says California may want to “address this stark dichotomy” — that is, the rise of the gig economy and the “creation of a low wage workforce performing low skill but highly flexible episodic jobs.”

Nonetheless, one expert tells Joel Rosenblatt at the Los Angeles Times, Corley’s ruling represents a substantial victory for GrubHub and other gig economy platforms:

Charlotte Garden, an associate law professor at Seattle University, said Corley’s decision is a “doubly big” win for Chicago-based GrubHub because of California’s relatively high standard for establishing workers as independent contractors.

“If they can make it here, they can more likely make it anywhere,” Garden said. “It is also the first federal court to reach a verdict on whether workers in the gig economy are employees or not, so companies like Uber and Lyft will also be celebrating this win.”

Lawson is represented by Shannon Liss-Riordan, the Boston-based attorney who also represented Uber and Lyft drivers in lawsuits that both of the ride-sharing platforms settled out of court in 2016, and who is challenging the independent contractor status of gig economy workers in other suits against Uber, Lyft, and other platforms.

Liss-Riordan says she intends to appeal Thursday’s ruling, telling TechCrunch: “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 also maintains that her client should have prevailed even under the Borello standard.