Here at Duggan Law Corporation, we advise California employers about classifying workers as either independent contractors or employees. The answer is significant to both parties because if the person is an employee, he or she is subject to applicable California and federal labor and employment laws governing overtime, minimum wage, workers’ compensation eligibility and more.
A new court opinion interpreting California law
On February 8, the U.S. District Court for the Northern District of California released the decision of a U.S. Magistrate Judge in the case of Lawson v. Grubhub, Inc. The court found that Lawson, a food delivery driver for Grubhub for a brief time, had been properly classified as an independent contractor because under state law, Grubhub did not have the “necessary control” of an employer over an employee’s work.
Grubhub is a nationwide company with a website linking hungry customers to local restaurants for online ordering. Lawson claimed that Grubhub should have classified him as an employee eligible for minimum wage, overtime and other benefits, rather than as an independent contractor.
California courts hold that the test of an employment relationship is whether the person or entity receiving the work services has the right to “control the manner and means of accomplishing the result desired.” In addition to the level of control, the leading case of Borello also lays out additional “secondary factors” for court consideration.
In a long and detailed analysis, the judge found that Grubhub had little control over the details of Lawson’s work. The judge looked at other delivery-driver cases in which those found to be employees were subject to “significantly more hirer control.” The court’s analysis of the Borello factors also weighed in favor of independent contractor status, even though some favored employee status. While this case is not binding California authority, it marks a potential wind shift in how California courts apply the Borello test and importantly is an example of its application in the context of the gig-economy.
Employers should get legal advice
To avoid litigation, which sometimes takes the form of class action lawsuits when many employees are involved, California employers should seek counsel early on to determine how to classify their workers, especially where it seems like the answer is too close to call. An attorney can help define and analyze the roles of workers to determine their proper classifications, depending on the business and its goals, according to the requirements of state and federal laws.