GrubHub Faces California Labor Lawsuit

San Francisco, CAThe battle over independent contractors in the sharing economy continues to grow, as an increasing number of companies face California labor lawsuits alleging they misclassify employees as independent contractors to avoid offering benefits and protections typically given to employees. Among the companies that have or are currently facing lawsuits are GrubHub, Lyft, Uber, Amazon Prime and DoorDash. And although many lawsuits have been filed in California, some companies now face lawsuits in other states.

In 2015, a lawsuit was filed against GrubHub alleging delivery drivers were misclassified as independent contractors. The claim is similar to those that were made against Lyft and Uber: that drivers are treated like employees but classified as independent contractors to avoid offering proper benefits and protections.

For drivers who claim they are employees, there could be a lot at stake. Not only are independent contractors not offered minimum wage, overtime and benefits, they are often responsible for their own costs of doing business, including vehicle maintenance, gas and parking charges.

GrubHub contracts drivers to deliver food from restaurants who do not hire their own delivery drivers. But those drivers allege they are treated like employees, not like independent contractors. Independent contractors are able to set their own charges for providing a service and typically have a great deal of authority over how they carry out their job duties.

According to court documents (found online at wired.com), GrubHub drivers are required to sign up for shifts in advance, and are told where to report for shifts, how to dress and where to go to await deliveries. Further, the drivers are given a set of requirements they must meet or risk having their contracts terminated. Drivers allege that when their pay and their expenses are taken into account, they frequently earn less than minimum wage, and are not paid overtime even when they work more than 40 hours in a week or 12 hours in a day.

A settlement was reached in the Uber lawsuit, but that settlement was overturned by the judge, who found that the dollar amount of the settlement was too low. US District Judge Vince Chhabria ordered the two sides to come to a new agreement that more fairly compensates drivers for their claims. The settlement did not result in drivers being reclassified as employees.

In addition to the California lawsuit, GrubHub now faces a federal lawsuit filed in the Northern District of Illinois.

The GrubHub lawsuit is Tan, et al. v. GrubHub Inc., case number 3:15-cv-05128, District Court, Northern District of California.