Grubhub Claims Drivers Aren't Employees

Grubhub told a former driver he couldn’t be considered an employee and was reimbursed for expenses under the Dynamex ruling’s classification test. The company further told a California federal judge that the test applies only to wage laws and the driver is litigating reimbursement claims.

Last week, Grubhub claimed that driver Raef Lawson is an independent contractor and his request for summary judgment should fail. It said the court should instead side with the delivery company because the ABC employee classification test upheld in Dynamex Operations West Inc. v. Superior Court doesn't apply to expense reimbursement claims under California's Labor Code Section 2802.

"In all the years of this litigation, plaintiff has never brought a wage order claim … and it is too late to amend his complaint to add such a claim now," Grubhub argued.

Lawson first sued Grubhub in 2015, saying the company withheld minimum wage and overtime pay from drivers and that drivers are owed reimbursements for costs accrued through deliveries, such as phone data, gas and parking. He worked as a driver from October 2015 to February 2016.

He said he was misclassified as an independent contractor — positions that are not afforded the same rights and benefits as employees.

In 2018, a district court ruled against him, saying Lawson was considered an independent contractor under an 11-factor employee classification test established in the 1989 suit S.G. Borello & Sons Inc. v. Department of Industrial Relations.

Lawson appealed the finding to the Ninth Circuit, arguing that his claims should be reconsidered under the three-prong ABC test upheld in the 2018 Dynamex ruling. The court found that the test, which weighs whether a worker is free from an employer's control, performs work outside the line of business and operates independently, dictates that Lawson is an employee concerning his wage claims after the California Supreme Court ruled the test can be retroactively applied to an employee's work.

The court remanded the question as to whether the ABC test applied to his reimbursement claims back to the district court. Lawson argued in a January filing that he should be considered an employee under these claims because he has met at least one prong of the test, that his work was a part of the company's regular course of business.

But in Grubhub's response Thursday, it said the Borello test should still apply because Lawson's claims are ineligible for consideration under the Dynamex test.

It argued that the California Supreme Court limited the application of the Dynamex ABC test to identify whether workers should be classified as employees or independent contractors for "purposes of California wage orders," not reimbursement claims under Section 2802. Other courts have also declined to apply the ABC test to claims outside of wage orders, Grubhub said.

The company also argued that the Dynamex finding rejected vehicle expenses as a viable reimbursement under California wage orders, saying reimbursing employees for transportation expenses does "not derive directly from the applicable wage order."

While Lawson said he is owed reimbursement for using his car and cellphone while making deliveries, which are "tools or equipment" under Caliifornia's Wage Order 9, Grubhub said this argument doesn't stand because he never alleged a violation of Wage Order 9 in his complaint.

Grubhub additionally argued that Lawson also cannot be protected by California's A.B.5 law, which extends employee status to some gig workers. Lawson worked for Grubhub before A.B.5 was passed in 2020 and the courts have found that the law does not apply retroactively, the company said.

Shannon Liss-Riordan of Lichten & Liss-Riordan PC, who represents Lawson, told Law360 on Friday that the law is clear that the ABC test applies to reimbursement claims and that Grubhub cannot claim under the test that its drivers are independent contractors.

"Grubhub has gone to extraordinary lengths to deny the ramifications of its violation of California [law] for years, in denying its drivers basic wage protections," Liss-Riordan said.

Theane Evangelis of Gibson Dunn & Crutcher LLP, who represents Grubhub, told Law360 that Lawson already has failed to prove his claim.

"Drivers who use the Grubhub app are, and should be allowed to continue working as, independent contractors," she said.

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