GrubHub May Face Calif. High Court Employee Test

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By Jon Steingart

The California Supreme Court’s new test for whether someone is an employee or independent contractor may first be applied in a lawsuit against GrubHub Inc.

Former food delivery driver Raef Lawson “will be moving for remand in the GrubHub case,” his lawyer, Shannon Liss Riordan, told Bloomberg Law. Lawson’s case is on appeal after he lost a lawsuit in February alleging the company misclassified him. He would have been entitled to overtime and business expense reimbursement if GrubHub had correctly classified him as an employee, he said.

Lawson would have several options that may put him on a path toward having his case decided under the revised standard, such as asking the court to hold a new trial.

“We are aware of the ruling by the California Supreme Court,” GrubHub said in a statement emailed to Bloomberg Law. “Because we are currently involved in the appeals process of Lawson v Grubhub, we cannot provide further comment other than to reiterate we are satisfied with the District Court’s decision in that case, and will continue to ensure delivery partners can take advantage of the flexibility they value from working with our company.”

The California Supreme Court April 30 said the correct test for classifying an employee under state pay law is the three-factor “ABC” test. Employee status is presumed unless the company can prove (A) the worker is free from its control, (B) the work is outside the company’s usual business, and (C) the worker is engaged in an independently established business operation. The old test weighed about a dozen factors, none of them an automatic disqualifier.

Tech Company or Ride Service?

The ABC test may seem to make it harder for companies to classify workers as independent contractors, but gig economy giants such as Uber Technologies Inc. and Lyft Inc. have defeated misclassification claims in part because they integrate aspects of the test in their workforce arrangements, Todd Lebowitz, a partner in Baker & Hostetler LLP’s Cleveland office, told Bloomberg Law by email.

“In every case filed against the ride sharing companies, their defense is built around the concept that they are a technology platform, not a ride company,” Lebowitz, who specializes in employment classification disputes, said. “That defense is even built into Uber’s corporate name, Uber Technologies. The concept is that they provide a platform for independent contractor drivers to use to run their own, individual businesses.”

Lyft and Uber may have a reputation as transportation companies, but they’ll say that their service is connecting riders with drivers who provide transportation services, Lebowitz said. This is how they’d argue that the worker provides a service different from the company’s, he said.

The case is Lawson v. GrubHub Inc., 9th Cir., No. 18-15386.

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