GrubHub Ruling Will Drive Future of Gig Economy

With the fast-paced growth of the gig economy, the line between independent contractors and employees has become more and more blurred. This has led to employee misclassification lawsuits employment misclassificationfiled by workers, claiming employers have taken advantage of their independent contractor status.

Those lawsuits could have a more clear outcome after U.S. District Court for the California Northern District filed a decision in a lawsuit against GrubHub Inc., according to Los Angeles  Times. U.S. Magistrate Judge Jacqueline Scott Corley Judge ruled GrubHub’s drivers are independent contractors and should not be classified as employees, and therefore will not receive the perks that come with that identifier.

Maintaining a workforce primarily made up of independent contractors is at the heart of the gig economy. Services like Uber, Lyft, Grub, Postmates, and others will often identify their companies as services that connect customers with contractors, rather than the providers of those services. That way they can work around supporting a staff of employees, and reap the benefits of massive cost reductions. Meanwhile, drivers and delivery people are beholden to the companies they contract for while being burdened with costs associated with the work they do without reimbursement.The associated costs can offset earnings, dropping workers below minimum wage. If the workers were classified as employees, this would be against  California minimum wage law, MW-2017. It also would be in violation of CA Labor Code 2802, which would require employers to cover or reimburse those expenses. However, due to this ruling, GrubHub drivers will continue to be deprived of these protections and will remain independent contractors, setting a precedent for other similarly structured companies.

Plaintiffs in the case contended that GrubHub was treating their independent contractors like employees through their expectations regarding accepting assignments and requirements to stay in certain geographical areas.

Our Orange County employee misclassification lawyers are concerned employers will use this ruling as a way to take further advantage of independent contractors, especially those in bigger cities who find themselves desperate for employment or side gigs to make ends meet. We are, however, intrigued by a portion of Judge Corley’s ruling in which she addressed the rigid dichotomy that currently exists and how it influenced her decision. In the past, the line between an employee and a contractor was much more clear. But this new era of service companies does not neatly fall into one category or the other. She called upon legislative officials to address these stark categories and examine if there is a better way to accommodate the gig economy.  Our attorneys understand that these low-wage, low-skill jobs offer high value in their ability to be flexible and available where and when customer demand exists, and deserve their own consideration under the law.

While the courts and Legislature iron out the future of gig jobs, our lawyers will continue to put your rights first and foremost. Our years of experience and full understanding of labor laws and the latest rulings will help fortify your case. If you think your employer is in violation of wage and hour laws or other labor laws, our team will help build your case and fight to protect you.

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

Additional Resources:

Tan and Lawson v. GrubHub Holdings Inc., Dec. 15, 2015, U.S. District Court for the California Northern District

More Blog Entries:

Employee Misclassification Cases Hitting Gig Economy Where It Hurts, Dec. 31, 2017, Orange County Employment Lawyers Blog