In a long-awaited decision, a San Francisco federal judge ruled that GrubHub properly classified a delivery driver as an independent contractor. The Feb. 8 ruling sheds meaningful light on the prominent and heavily-litigated issue of worker classification within the gig economy.
In the case, Lawson v. GrubHub, plaintiff Raef Lawson sued the food delivery service for minimum wage violations, unpaid overtime and failure to reimburse business expenses, all stemming from the theory that GrubHub should have classified him as an employee, not a contractor. Lawson made deliveries for GrubHub during a four month period until GrubHub kicked him off the platform because of terms of service violations. The parties agreed to forego a jury trial, and instead tried the case in front of U.S. Magistrate Judge Jacqueline Scott Corley in the Northern District of California
Judge Corley reviewed the case under the multi-factor test set out in the seminal California Supreme Court case S.G. Borello & Sons v. Department of Industrial Relations. Quoting from Borello, Judge Corley emphasized that the most important consideration in determining Lawson’s classification revolved around the level of GrubHub’s control over the “manner and means of accomplishing the desired result” (not its control over the desired result itself — i.e. the delivery of restaurant meals to consumers). Ultimately, she found that GrubHub exerted little control over the details of Lawson’s work, including whether or when he worked, how long he worked, and how and when he made deliveries, and in that regard she distinguished prior court decisions against FedEx and other transportation companies where drivers were found to be misclassified as contractors.
Notably, Judge Corley found that several other factors (beyond control) weighed in favor of employee status — including the low-skilled nature of the services, the hourly rate of pay and the fact that Lawson performed work that was part of GrubHub’s core business — but not enough to tip the scales in Lawson’s favor. Lastly, Judge Corley highlighted Lawson’s “dishonest” manipulation of GrubHub’s driver app (whereby he received pay for deliveries that he did not in fact make), to further support her determination that GrubHub exercised little control over Lawson’s work.
This is but one decision (which could be appealed) from one court, and by no means the final word on this issue under California law. Indeed, the California Supreme Court, in the Dynamex Operations v. Superior Court contractor misclassification case (also involving delivery drivers), will soon issue an opinion through which the court could potentially do away with the multi-factor Borello test in favor of a more narrow/worker-friendly test. The new test could, for example, be as simple as an assessment of whether the worker performs work that is core or integral to the business. If so, the worker would be deemed an employee with no further analysis around right of control or the like; if not, other factors would be considered. Such an opinion by the state’s high court would, effectively, render Judge Corley’s ruling toothless in state courts and agency proceedings.
Given the fluid nature of the law on this issue, businesses should be careful not to rely uncritically or aggressively on Judge Corley’s ruling to justify contractor status, and to keep in mind that these classification assessments are very fact- and company/industry-specific.