In gig economy test case, Grubhub worker ruled an independent contractor

Dive Brief:

In a much-watched gig economy case, a district federal court judge has ruled in favor of Grubhub, finding that it properly classified a driver as an independent contractor under California law. Much of the decision relied on the control aspect of the employer-worker relationship; Grubhub "exercised little control over the details" of the plaintiff's work, the opinion states.
The plaintiff, Raef Lawson, worked for Grubhub for six months. He sued the company, alleging he was an employee entitled to protections like overtime pay and minimum wage.
While Judge Jacqueline Scott Corley ruled in favor of Grubhub, she did make note of the "stark dichotomy" emerging between low-wage, low-skill workers employed in the gig economy and those that work under protection of the employee/employer relationship, calling it an "all-or-nothing proposition" under California law.

Dive Insight:

Experts debated whether the Grubhub decision would have much reach due to the fact-specific nature of classification, but the thought process in this opinion could provide a guide to employers.

The decision provides something of a "roadmap" for employers that want to engage contractors to perform services, Allan Bloom, partner and leader of the wage and hour practice group at Proskauer, told HR Dive. While the decision is based in California law and Grubhub's model is merely one of many forms of contract work, the focus on worker control offers a hint for how employers should approach the issue generally, he added.

"I think it in some sense reiterates that control will be the factor most looked at," he said. The facts of the case showed that Grubhub exerted little control over how and when Lawson worked, which played heavily in Grubhub's favor in the final decision. It's no small boon that success was found in a California court, of all places; the fact that a win is possible even in one of the most employee-friendly states matters for employers, Bloom noted.

The judge's call to the legislature to address the "dichotomy" between worker types does cast light on a growing movement in some jurisdictions to add protections specifically for freelancers and contractors. New York City passed the Freelance Isn't Free Act in March 2017, specifically protecting the pay of contract workers. Employers may see more such laws spring up in coming years, Bloom noted.