The Complicated Test of Employees Versus Independent Contractors

In today’s changing marketplace, “gig” employment is becoming increasingly popular. On-demand mobile services for ride-sharing, grocery delivery, restaurant delivery and many other services have created vast income opportunities for those seeking part-time or supplemental income. Unfortunately, this new and emerging labor market has complicated the legal rights of such workers. Many companies and employees experience conflict over the employee’s classification as either an employee or independent contractor. Despite the confusion, it is important to remember that all California workers have legal rights under the Labor Code and other employment laws.employment lawyers

The GrubHub Test Case

A case pending in federal court could have implications for thousands of “gig” workers across California. According to Quartz, GrubHub – a food delivery service –  has been sued over the classification of its delivery drivers. GrubHub classifies its drivers as independent contractors and provides them with 1099 tax forms to that effect. The driver suing GrubHub claims that he was treated as an employee, subject to the company’s control. In general, the more control an employer retains over the manner and timing of a worker’s output, the more likely it is that the worker will be classified as an employee instead of an independent contractor.

In 1989, the Supreme Court of California issued a case opinion which created a “control test” to determine whether workers were employees or independent contractors. There are eight factors to be examined by a court, and in performing this test, no single factor determines whether the workers is an employee or independent contractor. Instead, the court performs a “legal calculus” of all factors, weighing the factors differently as is appropriate in the particular situation.

The “legal calculus” performed in the GrubHub case will likely be among the most complicated ever performed by a court. The company’s COO has testified that it is not a food delivery service at all, and is instead a marketing tool for connecting diners with restaurants. While this appears to be an attempt to claim that food delivery is not the employer’s principal business (one of the eight factors to be examined by the court), it is difficult to overlook the public image which has been carefully cultivated by the company.

This is not the first time courts have examined this issue in large Silicon Valley startup businesses. In 2016, Uber settled a lawsuit with drivers in California and Massachusetts over their classification as independent contractors. The Verge reports that Uber paid a $100 million settlement to the drivers. In exchange, the company was allowed to continue classifying its drivers as independent contractors. The sheer numbers of this settlement demonstrate the amount of money companies can save by classifying workers as independent contractors instead of employees. This settlement does not, of course, bind the court to make the same determination when it resolves the GrubHub case.

If you have questions about your legal rights as a part-time, supplemental, independent, contract, or other employee, it is important to consult with an experienced Orange County employee misclassification attorney as soon as possible. Delays can forfeit legal rights to which you may be entitled.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 714-937-2020.

Additional Resources:

GrubHub is not a food delivery company, according to GrubHub, September 14, 2017 by Ephrat Livni, Quartz

More Blog Entries:

FedEx settles employee misclassification lawsuit, August 1, 2017, Employment Lawyer Blog