California Case is the Latest to Address Whether Worker is an Independent Contractor of Employee

by Stinson Leonard Street

Companies in many industries – including, for example, construction, trucking, logistics, restaurants, and food service – utilize independent contractors. In the past few years, plaintiffs' attorneys have been targeting companies, claiming that their independent contractors should really be classified as "employees" who are entitled to minimum wage, overtime, meal and rest breaks, and other forms of compensation. The question of whether someone is an "independent contractor" or is actually an "employee" is complex. But one recent decision in Lawson v. Grubhub, Inc. et al., which is pending in the federal district court in California, sheds some light on this topic.

A driver sued Grubhub, complaining that Grubhub had improperly classified him as an independent contractor rather than as an employee under California law. According to the driver, by misclassifying him, Grubhub violated California's minimum wage, overtime, meal and rest break, and employee expense reimbursement laws.

The court noted that in misclassification cases, the company's "right to control work details" is the most important consideration, and stated that the following facts showed that the driver was not Grubhub's employee, and was instead an independent contractor:

  • Grubhub did not control whether the driver made deliveries by car, motorcycle, scooter, or bicycle, or the condition of the driver's mode of transportation.
  • Grubhub did not control the driver's appearance.
  • Grubhub did not require any signage on the driver's vehicle.
  • Grubhub did not require the driver to carry any particular condiments, straws, or extra napkins.
  • No Grubhub employee ever performed a ride-along with the driver.
  • No Grubhub employee ever met the driver in person before the lawsuit.
  • Grubhub did not control who would be with the driver in his vehicle during deliveries.
  • Grubhub did not control whether and how long the driver worked on any given day.
  • Grubhub had no control over the driver's delivery route.
  • The driver often made deliveries for other services while he was delivering for Grubhub.

The court acknowledged that Grubhub required that the driver's chosen vehicle be registered and insured, but these requirements were mandated by "government regulation" and therefore didn't establish that the driver was an employee. Additionally, Grubhub provided the driver with a shirt, hat, and insulated bag bearing the company's name, but the driver was not required to use these items. Finally, although Grubhub determined in advance the driver's pay and which delivery zones would be available for the driver's selection, these facts did not establish an employer/employee relationship.

If your company utilizes independent contractors, we suggest reviewing the relationship to ensure you comply with applicable laws in your state.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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