The Gig Economy Just Scored A Big Legal Victory

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Kevin Daley Supreme Court correspondent
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A federal judge in California handed down a landmark ruling Thursday, which found that a Grubhub food delivery driver should not be considered an employee of the company.

The decision is a significant victory for so-called gig economy companies like Uber. It is the first time a federal court has said their workers are properly thought of as contractors instead of employees. Contractors have fewer rights and privileges than full-fledged employees.

The case was occasioned when Raef Lawson, a former Grubhub driver, sued the company for backpay, arguing he was owed minimum wage, overtime, and reimbursement for expenses. U.S. Magistrate Judge Jacqueline Scott Corley of the District Court for the Northern District of California rejected his argument, finding that the company was right to classify him as a contractor.

“While some factors weigh in favor of an employment relationship, Grubhub’s lack of all necessary control over Mr. Lawson’s work, including how he performed deliveries and even whether or for how long, along with other factors persuade the Court that the contractor classification was appropriate for Mr. Lawson during his brief tenure with Grubhub,” she wrote.

The judge explained that the company had did not control the manner and means by which Lawson completed his tasks, noting Grubhub officials did not dictate how he should complete deliveries, what orientations, if any, he should attend, what he should wear, or to whom he could hypothetically subcontract his task. Indeed, Lawson did not meet a single GrubHub official in person until he filed his lawsuit.

The decision is not technically precedential, limiting its use in other federal courts.

Grubhub CEO Matt Maloney said the ruling was a victory for flexibility and freedom for contractors and consumers.

“We’re extremely satisfied with today’s ruling in Lawson v. Grubhub, which validates the freedom our delivery partners enjoy from deciding when, where and how frequently to perform deliveries. We will continue to ensure that delivery partners can take advantage of the flexibility that they value from working with Grubhub.”

The decision can be appealed to the 9th Circuit Court of Appeals.

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