Federal judge hands Grubhub a huge victory in groundbreaking gig economy trial

Raef Lawson worked as a restaurant delivery driver for Grubhub for four months in late 2015 and early 2016. He claimed that the company misclassified him as an independent contractor, and owed him overtime for hours he worked over 40 in any workweek.

Last week, in Lawson v. Grubhub [pdf], a California federal judge granted the gig-employer a huge victory by ruling that Lawson and all other similarly situated drivers are independent contractors, and not employees.

The court found that Grubhub lacked the necessary control over the driver’s work for him to be considered an employee.

In California (as in Ohio, most other states, and under current federal law) the test to determine whether a worker is an employee or an independent contractor is whether the business has “the right to control the manner and means of accomplishing the result desired.”

The judge found that Grubhub did not exercise sufficient control, as it:

• Exercised little control over how Lawson made his deliveries, not interfering with his choice of vehicle;
• Didn’t control his appearance, require him to wear a special uniform, or meet any appearance standards;
• Lacked required training or orientation;
• Imposed no limits in passengers in the vehicles during working hours;
• Didn’t control, whether, and for how long, a driver works;
• Allowed drivers to cancel their shifts at any time without penalty or consequences; and
• Prepared no performance evaluations.

And while one cannot understate the significance for employers of the first federal court opinion to hold that a gig worker is an independent contractor, and not an employee, perhaps the most important aspect of the opinion is Magistrate Judge Corley’s call to legislative arms to address this issue:

[W]hether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition. 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. 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. 

In other words, the gig economy is not going away, and will only increase in importance. As the number of gig workers increases, what will our government do to protect their pay, their benefits, their safety, and their civil rights? Because if they are independent contractors, they enjoy almost no protections under the current state of the law.