Up to this point the gig economy has depending on shifting all the blame and responsibility to its users and providers. Cases like this may force it to take some responsibility both for its actions and for its front-line workers.
— Jason Clampet
The gig economy — and especially Uber Technologies Inc. — is watching an aspiring Los Angeles actor.
Raef Lawson, who worked as a food-delivery driver for GrubHub Inc. while pursuing a career as an actor and writer, is the first to go to trial in a U.S. court to challenge what some see as the future of the American workplace — a model built on treating workers as independent contractors instead of as employees.
The dueling lawyers in Lawson’s case are also fighting in the same San Francisco federal courthouse over the status of hundreds of thousands of drivers for Uber in a lawsuit that has dragged on for four years. How such cases play out may shape the future of internet-enabled companies that pair customers with products and services through apps and typically avoid the costs of traditional employment.
U.S. Magistrate Judge Jacqueline Scott Corley, who has been hearing the GrubHub case without a jury, is set to hear closing arguments Monday. She will be the first federal jurist to determine whether a gig-economy driver deserves the protections of employees under California law. Uber lost a similar case in the U.K. and is now appealing.
As the first so-called misclassification case of its kind in the U.S., the GrubHub trial “will inevitably be treated as a bellwether,” said Charlotte Garden, an associate law professor at Seattle University.
“That’s especially true because the lawyers in this case are also involved in other larger and higher profile misclassification cases, including the Uber case,” Garden, who has followed the Uber litigation closely, wrote in an e-mail in response to questions.
The question of whether Lawson is an employee turns on how much control Corley concludes that GrubHub exerts over the work life of its drivers. The company, which competes with Uber in restaurant food delivery, argues Lawson decided when, where, and how frequently he performed door-to-door deliveries. The driver “was an independent contractor in business for himself, not an employee of GrubHub,” the Chicago-based firm said in an e-mailed statement.
Lawson worked less than six months for GrubHub in Los Angeles. His lawyer, Shannon Liss-Riordan, contends that GrubHub expects drivers to be be available to accept assignments during shifts they sign up for and to remain in designated geographical areas.
GrubHub can unilaterally terminate drivers who failure to meet expectations, Liss-Riordan said in a court filing. She alleges that the company violated California labor laws by not reimbursing Lawson’s expenses, paying him less than minimum wage and failing to pay overtime.
“With more and more companies attempting to avoid the employee label, in the fiercely competitive food delivery arena in particular, a company like GrubHub is effectively fueling a race to the bottom, making it nearly impossible for a law-abiding company to compete,” Liss-Riordan said in a court filing.
Lawson’s case has two phases. In the first part, he seeks to prove he was misclassified as a contractor. If he prevails, he can try to represent other California GrubHub drivers through the state’s Private Attorneys General Act, or PAGA, which gives employees the right to step into the shoes of the state labor secretary to bring enforcement actions.
Uber faces several employment suits filed under the same statute, in which penalties can apply retroactively on a per-pay-period basis and accrue to millions and even billions of dollars. Under PAGA, the state keeps 75 percent of any penalties won and the remaining 25 percent is a reward for the workers who bring the case.
Even if Lawson wins, GrubHub may simply “tweak” its model, Garden said.
“If it loses this trial, I predict that it will make some minor changes to the way it operates, in the hope of heading off future liability,” the law professor wrote in an email. “Other platform companies are presumably watching this case closely, and may do the same.”
The case is Lawson v. GrubHub, 15-cv-05128, U.S. District Court, Northern District of California (San Francisco).
©2017 Bloomberg L.P.