GrubHub Driver Found to Be Independent Contractor, Not Employee

Decision is a cautionary win for companies in the gig economy

By Todd B. Scherwin and Andrew J. Hoag February 14, 2018
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GrubHub Driver Found to Be Independent Contractor, Not Employee

Employee, independent contractor, or something not yet classified by the California Legislature? While the twenty-first century forges ahead with persons performing labor in nontraditional ways, the law lags behind practice in classifying a certain aspect of the modern workforce: the gig worker.

Traditionally, when the means and manner of labor is controlled by the employer, an employer-employee relationship exists. As such, the employee enjoys the protections of an employment relationship, such as overtime and meal-and-rest breaks. As part of the determination of whether an employer controls manner and means of work, California courts use a multi-factor, multi-tiered test commonly known as the Borrello test. Too often, the unbending dichotomy of employee or independent contractor leads to litigation. And all too often, the multi-factor, multi-prong Borrello test makes litigation all too uncertain.

In this case, the U.S. District Court for the Northern District of California succinctly noted: "Under California law whether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition." And shortly thereafter, the court issued a call to the Legislature to address the dated, bifurcated system of employment classification: "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." But unless and until the Legislature heeds the court's call to action, litigation over this important issue will continue and, as in the case of Lawson, with uncertain results.

The case involved a driver for GrubHub, an online food-ordering service that permits customers to order food for delivery from local restaurants. Customers order from GrubHub, the company transmits the order to the restaurant, and a driver, or the customer, then picks up the food from the restaurant. The plaintiff delivered food for GrubHub over a four-month period during which he also delivered food for Postmates and Caviar, both similar online food delivery services.

While going through the Borello factors, the court determined that the plaintiff was not an employee, as he delivered for other driving companies, did not need to wear specific attire as he often elected not to wear the GrubHub hat or shirt, chose when to work and whether to reject various deliveries, chose what route to take and if and when to stop along the way, and chose the geographic zone in which he wished to deliver food. GrubHub also did not require the plaintiff to undertake mandatory training or onboarding. These various factors were all part of the court's determination that the plaintiff was not an employee.

Lawson is valuable for employers because it presents a case where a court found a gig economy worker an independent contractor who is not afforded the rights and privileges proscribed by an employment relationship. Although the court found that the plaintiff was not an employee, employers should take a cautionary note as the court found many of the Borello factors suggested an employee relationship, and the court's decision was based, in part, on its finding of the plaintiff's lack of credibility. The court found that he manipulated the driver app so that GrubHub would sometimes pay him for doing nothing.

[SHRM members-only HR Q&A: Who can be considered an independent contractor?]

Lawson v. GrubHub, N.D. Cal., No. 15-CV-05128 (Feb. 8, 2018).

Professional Pointer: After oral argument, and before issuing an opinion, Magistrate Judge Corley noted that she doubted her ruling on this case is the last word on the issue of whether gig works are employees or independent contractors. Unfortunately, she is almost certainly correct. As her plea to the Legislature alludes, the current bifurcated classification coupled with the complicated multiprong, multitiered test will continue to make proper classification and court decisions regarding classification difficult.

Todd B. Scherwin and Andrew J. Hoag are attorneys with Fisher Phillips in Los Angeles.

 

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