United States: Grubhub Wins First Independent Contractor Misclassification Trial In The Gig Economy

Michael T. Maroney is a partner in Holland & Knight's Boston office

Independent contractor misclassification claims have been percolating through the courts for years. Some were swept away by a wave of federal preemption, which has subsided. Others found their way to the summary judgment stage, with mixed results. Many more settled before a decision on the merits of whether the workers were properly classified as independent contractors. But, on Feb. 8, 2018, U.S. Magistrate Judge Jacqueline Scott Corley in the Northern District of California issued an opinion following a six-day bench trial, holding that a delivery driver for Grubhub was properly classified as an independent contractor. See Lawson v. Grubhub, Inc., Case No. 3:15-cv-05128-JSC, Doc. No. 221 (N.D. Cal. Feb. 8, 2018). This case is significant because it is believed to be the first independent contractor misclassification claim for a member of the "gig" economy to reach a judicial merits determination at trial.

By way of brief background, the plaintiff, Raef Lawson, worked as a restaurant delivery driver for Grubhub for four months in late 2015 and early 2016. Lawson alleged that Grubhub controlled the manner and means by which he worked, and therefore misclassified him as an independent contractor, when he should have been deemed an employee. As a result, he claimed Grubhub violated California's expense reimbursement, minimum wage, and overtime laws, and he also asserted claims under California's Private Attorneys General Act, Cal. Lab. Code § 2698 et seq. Grubhub argued that Lawson enjoyed a degree of freedom and flexibility that is incompatible with any notion of employment, and he was properly classified as an independent contractor under California law.

In holding that the contractor classification was appropriate for Lawson, the court applied the multi-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989). The court found that Grubhub exercised little control over the details of Lawson's work, and while some factors weighed in favor of an employment relationship, as a whole, the factors established that Lawson was an independent contractor and not an employee.

One key take-away from this case is the court's comparison of the facts before it to other cases addressing the independent contractor/employee status of delivery drivers. The court noted that cases where delivery drivers were found to be employees all evidenced significantly more control over the details of the drivers' work, including the drivers' schedules, routes, equipment, vehicles, and appearance. Because the alleged employer bears the burden of proving that the individual was an independent contractor and not an employee under the laws of California, Massachusetts, and other states, it behooves companies to study these cases and consider where on the spectrum their particular independent contractor relationship falls.

While Lawson is a well-reasoned decision from a federal court in California, these types of cases, particularly against delivery service providers, are not going away anytime soon. Holland & Knight's lawyers remain actively engaged in independent contractor misclassification actions across the country, and we will continue to provide updates on this important topic.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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