Grubhub Trial Could Have Major Implications on Gig Economy

SAN FRANCISCO (CN) — Whether a Grubhub delivery driver was “his own boss” or controlled by his employer was the pivotal question on the first day of a bench trial that could have far-reaching implications for the gig economy.

Raef Lawson, an aspiring actor from Los Angeles, claims Grubhub misclassified him as an independent contractor and denied him minimum wage, overtime pay and reimbursement of expenses.

Lawson’s attorney, Shannon Liss-Riordan, who has represented workers in class actions against Lyft and Uber, said this is the first case to make it to trial in California challenging a startup’s classification of an employee as an independent contractor.

“We’re not going to take on the whole gig economy in this one trial,” Liss-Riordan said in her opening statement Tuesday. “We are biting off a little piece of it.”

The case centers on whether Lawson was misclassified as a contractor. U.S. Magistrate Judge Jacqueline Scott Corley denied a motion for class certification last year, finding Lawson could not represent a class of delivery drivers because he did not sign an arbitration agreement like other drivers.

Liss-Riordan on Tuesday ran down the list of ways GrubHub exerted control over her client: by tracking his location, requiring him to accept nearly all delivery orders within 20 seconds, and threatening to terminate his shifts or job if he failed to obey those orders.

Grubhub attorney Theodore Boutrous Jr. painted a different picture in his opening argument. He said Grubhub offers a system that benefits workers like Lawson because they can set their own flexible hours and make money while pursuing their dreams.

“It’s abundantly clear this flexibility was important to Mr. Lawson because when you’re pursuing a job in the entertainment industry, you need all the flexibility you can get,” Boutrous said.

Lawson set his own schedule and was never required to work a certain amount of hours. He could wear what he wanted, take whatever routes he chose for his deliveries, and even hire or designate others to make deliveries for him, Boutrous said.

But Liss-Riordan argued that Lawson had to sport a Grubhub hat and shirt or pay extra to rent an insulated bag for deliveries. Grubhub also required drivers wear closed-toed shoes.

Although Lawson’s contract allowed him to hire or designate others to make deliveries for him, the low pay and inability to redirect orders through the app made that option impractical, Liss-Riordan said.

She contested Grubhub’s claim that Lawson could set his own hours. The most desirable scheduling blocks were often gobbled up before Lawson could sign up for them, forcing him to sign up for whatever shifts he could get, she said.

“GrubHub says you can pick your hours,” Liss-Riordan said. “As a practical matter, it was pretty slim pickings.”

Boutrous said the fact that Lawson worked for at least 11 other “gig economy” startups while working for Grubhub supports the argument that he was a free agent and independent contractor. He said Grubhub has evidence that Lawson made deliveries for other services such as Postmates and Caviar during his scheduled shifts with Grubhub.

Additionally, Boutrous pointed out that Lawson deducted expenses as a contractor when filing his tax returns and that in a deposition, when asked what he would say he did for a living in 2015, Lawson answered, “mainly an independent contractor.”

Liss-Riordan countered that just because Lawson signed a contract stating that he was a contractor and would abide by Grubhub’s terms to make money, that doesn’t mean he was a contractor.

“He was not in the business of food delivery,” Liss-Riordan said. “He was delivering for a company. He wasn’t making business decisions as a business owner. He was just trying to pay the rent.”

One factor that affects Lawson’s classification is whether his work supported the company’s core or principal business. That’s one of 11 sub-factors the California Supreme Court established to determine whether a worker is an employee or contractor in the 1989 ruling, S.G. Borello & Sons Inc. v. Dept. of Industrial Relations.

Boutrous told the judge that Grubhub started in Chicago in 2004 as a platform to help market restaurants, “especially independent mom and pops,” to broader audiences. The company’s core business remains marketing, and the food delivery service launched in 2014 is merely “a small part” of the business, Boutrous said.

But Liss-Riordan said the company employs thousands of drivers across the country and that food delivery is “a growing part of its business.”

Wrapping up her opening statement, Liss-Riordan said she intends to prove that Grubhub paid her client only half the money he is owed for mileage reimbursement, less than minimum wage on several days, and no overtime when he worked over 40 hours.

Liss-Riordan said there are “potentially a lot of people waiting out there in the wings” to see how this case shakes out.

“We look forward to arguing our case after the evidence is submitted,” she said.

Lawson took the stand as the first witness on Tuesday and was expected to continue testifying Wednesday.

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