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Federal Court’s Ruling in GrubHub Case is a Win for Gig Companies, but it Doesn’t Settle the Debate Over Workers’ Status

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A potential watershed ruling that a former Grubhub delivery driver was properly classified as an independent contractor rather than an employee is a victory for gig economy companies who hope the decision will help defeat similar lawsuits and provide some needed clarity in this area. However, the debate in this regard is far from over.

A California federal judge held[1] that GrubHub delivery driver, Raef Lawson, was not entitled to the benefits and protections of being an employee. In reaching its decision that the plaintiff performed delivery services as an independent contractor, the court weighed a number of factors – the most significant considerations being that GrubHub exercised little control over the details of the work such as how he made deliveries or regarding his appearance, and that GrubHub did not require him to undergo any particular training or orientation. California courts currently analyze misclassification cases under a multifactor test the state Supreme Court laid out in 1989 in S.G. Borello & Sons Inc. v. Department of Industrial Relations. The Borello test emphasizes an employer’s control over workers claiming employee status, and considers several secondary factors, including whether their work is supervised, whether workers supply their own equipment, and the skills required of them to perform their jobs.

The GrubHub ruling’s instructive value and the gig economy employers’ celebrations may be short-lived, however, depending on how the California Supreme Court rules in another case that may upend the Borello standard.[2] Indeed, the California Supreme Court recently heard oral arguments in the Dynamex case on whether to replace Borello with a test that would make it easier for workers to demonstrate they are employees rather than independent contractors. The California Supreme Court’s decision in Dynamex is expected within the next 90 days.

[1] Raef Lawson v. GrubHub Inc. et al., case number 3:15-cv-05128, in the U.S. District Court for the Northern District of California.

[2] Dynamex Operations West, Inc. v. Superior Court of Los Angeles, California Supreme Court case number S222732.