- GrubHub defended its drivers' independent contractor status Monday in closing arguments in a lawsuit challenging that classification, TechCrunch reports.
- Raef Lawson, a fired former GrubHub driver, sued the restaurant chain, alleging that he was actually an employee and entitled to all the protections that come with that status, like overtime pay. Courts generally consider how much control a business exerts over the workers to decide their proper classification.
- Lawson's lawyer argued that he didn't have control over his schedule and is obviously an employee, while GrubHub's counsel maintains that Lawson worked whenever he chose and drove for other companies, which an employer wouldn't likely have allowed, according to TechCrunch. The judge said the burden was on GrubHub to prove Lawson was an independent contractor, but she wasn't convinced that the restaurant had made the case.
Litigation over on-demand service providers is unlikely to end anytime soon. But the GrubHub case is being closely watched as a potential test case for other companies. While the courts sort this question out, employers must ensure that all independent contractors meet current tests for that classification.
The Fair Labor Standards Act (FLSA) has a six-point test for determining how to classify workers that's can serve as a starting point. It calls for employers to consider:
- the extent to which the worker's services are an integral part of the employer's business;
- the permanency of the relationship;
- the amount of the worker's investment in facilities and equipment;
- the nature and degree of control by the principal;
- the worker's opportunities for profit and loss; and
- the level of skill required in performing the job and the amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent enterprise.
The IRS also has guidelines for determining workers' classification, as do some states and courts.
And even if HR is clear about who can be a contractor, it must ensure that the employees managing those relationships understand what level of control they're permitted to exert over how and when work is done.