(Reuters) - A U.S. judge in San Francisco on Thursday said a former Grubhub Inc (GRUB.N) delivery driver was an independent contractor and not the company’s employee, in the first case of its kind against a “gig economy” company that went to trial.
U.S. Magistrate Judge Jacqueline Scott Corley said Grubhub did not control Raef Lawson’s work, so it was not his employer under California law. The Chicago-based company did not supervise Lawson, tell him when to work, what kind of transportation to use or what routes to take, she said.
Grubhub, Uber Technologies Inc UBER.UL, and other gig economy companies have based their business models on treating workers as independent contractors who are not entitled to minimum wage and overtime payments and other legal protections afforded to employees.
Thursday’s decision could influence a series of lawsuits across the country in which Uber, Lyft, and other companies are accused of misclassifying workers as independent contractors and depriving them of millions of dollars in pay and expenses.
Noting that independent contractors do not receive any of the legal protections afforded to employees, Corley on Thursday said California state lawmakers “may want to address this stark dichotomy.”
Michele Maryott, a lawyer for Grubhub, said in a statement that ”delivery partners gravitate to Grubhub, rather than traditional employment, precisely because of the independence and autonomy they have over their workdays and over their businesses.”
A lawyer for Lawson did not respond to a request for comment.
Lawson had worked for the company for four months but was blocked from Grubhub’s smartphone app in 2016 for not making deliveries while he was signed on, according to court documents.
Lawson said several factors established that he was an employee, including that delivery work was critical to Grubhub’s business model. Grubhub also typically paid a minimum hourly rate, rather than a per delivery fee, Lawson said.
Grubhub argued it was a software development company, and not a food delivery service, so workers like Lawson were not central to its business. That is a key factor in determining whether a worker is an employee.
Grubhub also said it did not have the control over drivers that is required to establish an employment relationship.
On Thursday, Corley said some factors weighed in Lawson’s favor, but the company’s complete lack of control over how he performed deliveries meant he was an independent contractor.
The case is Lawson v. Grubhub Inc, U.S. District Court for the Northern District of California, No. 3:15-cv-05128.
Reporting by Daniel Wiessner in Albany, New York, Editing by Alexia Garamfalvi and Cynthia Osterman