Grubhub is facing allegations from delivery drivers across the country who claim the popular online and mobile food ordering company misclassified them as independent contractors and denied them overtime wages.
Grubhub is the creator of popular mobile applications and online services that allow users to access digital restaurant menus, order and track food delivery from restaurants. Grubhub offers food delivery from partner restaurants that don’t offer their own delivery services. The company, which refers to its drivers as "delivery partners," is currently present in over 1,000 cities in the U.S. and London, according to its website.
A proposed class action lawsuit filed June 28, 2016, in the U.S. District Court for the Northern District of Illinois (Souran v. Grubhub Holdings, Inc., No. 1:16-cv-06720) appears to be the second misclassification class action lawsuit the company's delivery drivers have initiated. The lawsuit was brought on behalf of drivers across the country, with the exception of California, by the Chicago firm Stephan Zouras and the Boston firm Lichten and Liss-Riordan. Global law firm Reed Smith LLP is representing Grubhub.
Attorney Shannon Liss-Riordan, well-known for representing plaintiffs in nationwide Uber class action lawsuits, is one of the attorneys representing plaintiffs in a similar lawsuit filed last year in the U.S. District Court for the Northern District of California (Tan v. Grubhub, Inc., No. 3:15-cv-05128). A magistrate judge recently denied Grubhub’s motion to dismiss that complaint and ruled that the case will move forward.
Instead of making a phone call or leaving their homes, today’s customers prefer to swipe for services. In response, companies have employed creative and convenient tools (like mobile applications) to simplify consumers’ lives. However, this increased need to meet fast-paced consumer demands invokes legal implications at the workplace for companies.
Job descriptions and how workers are expected to execute tasks are changing as rapidly as the convenient technological solutions companies employ. And with these industry changes comes an increased probability of worker lawsuits against companies.
The Grubhub lawsuits arrive at a time where companies utilizing application-based technology are experiencing a rise in labor and wage class action lawsuits. For example, results from Bloomberg Law’s Representation Analytics Tool indicate that Grubhub’s labor-related litigation now accounts for approximately 20 percent of the company’s overall litigation (granted, this is a relatively young start-up).
Popular mobile application service companies, such as Uber, face similar lawsuits. These lawsuits call into question how employee classification, overtime and minimum wages fit within the constantly growing realm of on-demand services. Companies may encounter an increased need to reexamine worker classification and wages, as well as the parameters of services their workers perform.
In the latest complaint, the plaintiffs allege that Grubhub improperly misclassified delivery drivers as independent contractors and as a result, committed wage and hour violations under the Fair Labor Standards Act (FLSA) and various state laws. The drivers claim that because Grubhub required them to work on scheduled delivery shifts, assigned their delivery routes and made them wear uniforms, they were actually employees.
Grubhub hasn’t yet filed an answer to the complaint. The company recently filed a motion for an extension of time to file an answer. If the court finds the company liable, the company may be ordered to pay unpaid overtime and minimum wages, as well as back-pay and possible court costs and attorneys’ fees.
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