A US appeals court on Monday, September 20, stated a California federal judge must reconsider her ruling that Grubhub was correct to treat a delivery driver as an independent contractor rather than an employee, in light of a major shift in state law governing worker classification.
A unanimous three-judge panel of the 9th US Circuit Court of Appeals said that because a strict classification standard adopted by the California Supreme Court in 2018 was retroactive, the federal judge must apply it in a case brought by former Grubhub driver Raef Lawson.
Many lawsuits have been filed accusing “gig economy” companies of misclassifying workers, and the Grubhub case was the first to go to trial. But the 9th Circuit panel said rather than applying the new classification test now, US Magistrate Judge Jacqueline Scott Corley should review it first.
Chicago-based Grubhub and its lawyers at Gibson, Dunn & Crutcher did not immediately respond to requests for comment. Nor did Shannon Liss-Riordan of Lichten & Liss-Riordan, who represents Lawson.
Worker classification is a key legal issue for gig economy firms, whose business model relies on using independent contractors. A company must pay its employees the minimum wage and overtime and reimburse them for expenses, among other costs.
In a 2015 lawsuit, Lawson claimed Grubhub owed those protections to delivery drivers because the company controlled when they worked and how they performed their jobs.
Corley in 2018 denied Lawson’s class certification motion, saying he was one of only two drivers in California to opt out of an arbitration agreement with Grubhub and thus did not adequately represent the proposed class.
The judge then held a bench trial on the classification issue and sided with Grubhub. She said the company did not supervise Lawson or tell him which days to work, what kind of transportation to use or what routes to take.
