Grubhub can’t shake suit by former driver in landmark labor code fight

SAN FRANCISCO (CN) — A federal judge ruled that Grubhub must face claims brought by a former delivery driver challenging the company's classification of its workers.

Los Angeles resident Raef Lawson drove for Grubhub from October 2015 to February 2016, and sued the delivery giant during his tenure there. He claims the company mislabeled him as an independent contractor and failed to pay him minimum wage, overtime pay, or fully reimburse him for job-related expenses. 

In 2018, after a bench trial U.S. District Judge Jacqueline Scott Corley ruled Lawson was not an employee, but on remand from the Ninth Circuit reversed course in 2021 and found Lawson was legally a Grubhub employee during his four months at the company, not an independent contractor. He was awarded $65.11 for his minimum wage claims in March 2023.

Lawson also brought an action under California’s Private Attorneys General Act (PAGA), a law that allows private citizens to act in the place of the state attorney general to recover penalties for labor violations.

In its motion for partial summary judgment, Grubhub argued that because Lawson only worked for the company for four months, he could only assert claims for that time period. Grubhub insisted that because Lawson did not suffer harm when he wasn't working for Grubhub, he did not have legal standing to pursue PAGA penalties for individuals who were employed by Grubhub before or after him.

“Allowing Lawson to seek PAGA penalties for a nine-year period— when he used the Grubhub platform for only four months—would contradict the Legislature’s intent to limit PAGA standing to those with a concrete stake in the litigation to avoid abusive fee-motivated lawsuits,” Grubhub argued in its motion.

But Corley denied the motion, finding she had already ruled that Lawson suffered from minimum wage violations and is therefore an “aggrieved employee” who is allowed to bring a lawsuit to collect civil penalties under PAGA “on behalf of himself or herself and other current or former employees”  regardless of what time period he was employed as a driver for Grubhub.

“Nothing in the statute limits a PAGA plaintiff from recovering PAGA penalties for Labor Code violations that occurred before or after the plaintiff’s employment. To the contrary, a PAGA plaintiff may recover penalties for aggrieved employees who suffered violations the plaintiff never personally suffered,” Corley wrote.

Grubhub also argued that the 2018 ruling in Dynamex Operations West, Inc. v. Superior Court had changed the legal standard of the case. In that landmark case, the California Supreme Court held that workers are presumptively employees for the purpose of California's wage orders and that the burden is on the hiring entity to establish that a worker is an independent contractor not subject to wage order protections. 

After Dynamex, Assembly Bill 5 was passed in 2019 that set stricter standards for worker protections and established new sets of criteria for who is and isn’t classified as an employee.

Grubhub argued that applying Dynamex retroactively violated due process, even though Dynamex is legally applicable retroactively.

“This court has already determined that Grubhub complied with the governing law at the time Lawson used the platform and that Dynamex retroactively effected a ‘sea change’ in the law,” Grubhub said in its motion. “Due process principles of fair notice thus prevent the imposition of quasi-criminal penalties under PAGA when Grubhub had no reason to believe its lawful conduct would later be evaluated under a different legal standard.”

But Corley found Dynamex was “settled law,” and that applying its standards retroactively does not violate the due process rights of Grubhub.

“Grubhub cites no case that supports finding the imposition of civil penalties unconstitutional in such circumstances, that is, when the law the defendant/employer claims is new was within the scope of what employers reasonably could have foreseen,” Corley wrote.

Lawson’s was the first known case to make it to trial in California challenging a technology firm's classification of its worker as an independent contractor, and came amid new fights by gig workers around the country to be classified as employees.

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