On February 8, 2018, in Lawson v. Grubhub, Inc., Case No. 15-cv-05128-JSC, the United States District Court for the Northern District of California ruled that a restaurant delivery driver for Grubhub, Inc., an internet food ordering service that connects diners to local restaurants, was an independent contractor, not an employee.  In a rare win for the “employer” on this issue, the court found in favor of Grubhub on the driver’s claims of misclassification as an independent contractor and of minimum wage, overtime and expense reimbursement violations that would only be viable if he were found to be an employee.

Applying the current applicable California Supreme Court multi-factor test in S.G. Borello & Sons, Inc. v. Dept. of Indus. Rel., 48 Cal.3d 341 (1989), the Grubhub court found the facts weighed in favor of the driver being an independent contractor on the primary and most important factor—the right to control the manner and means of the driver’s work.  Namely, the court found little control by Grubhub over the driver.  For example, Grubhub did not control the following:

• How the driver made food deliveries (he chose his mode of transportation and could choose his own routes);
• What the driver wore (no uniforms or car signage);
• Training or script;
• Supervision (the driver in fact never met any Grubhub employee);
• Schedule (the driver made his own schedule, no minimum hours were required, and the driver could accept or reject an order for delivery as he pleased);

Grubhub did, however, control the driver’s rate of pay and the geographical boundaries of the delivery zones, but on balance these few facts did not tip the scale to employment.

The court then addressed the secondary Borello factors and found they too weighed in favor of an independent contractor relationship.  These eight lesser factors were applied as follows:

• Distinct Occupation—the driver was not in a different occupation, and this weighed in favor of employment;
• Work Performed under Supervision—the driver worked unsupervised, and this weighed in favor of an independent contractor relationship;
• Skill Required—no special skills were needed, and this weighed in favor of an independent contractor relationship;
• Tools and Equipment —the driver provided his own car and phone, and this weighed in favor of an independent contractor relationship;
• Length of Performance—the driver worked four months, for a few hours on the days he chose to work, and could end the relationship at any time, and this weighed in favor of an independent contractor relationship;
• Method of Payment—Grubhub paid the driver an hourly rate and this weighed in favor of employment;
• Whether Work was Part of Company’s Regular Business—the driver’s food delivery work was a part of Grubhub’s regular food delivery business, and this weighed in favor of employment; and
• The Parties’ Intent—the court found this was a neutral factor as the existence of a written independent contractor agreement was not controlling on the issue of intent.

This ruling will likely have far-reaching implications for other ride-share and gig economy companies. In its concluding remarks, the court noted its decision was the product of the legislature not addressing the recent gig economy with its low wage workforce performing low skill but highly flexible episodic jobs in defining employment.  As such, the present test under applicable case law (the Borello test) resulted in a finding that the gig economy company simply did not exert enough control over its driver to deem him an employee.

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• Michael S. Kalt
• Emily J. Fox
• Martina Nagle