A trial involving GrubHub, a mobile food ordering company, is raising critical questions about whether workers should be treated as independent contractors or employees. According to a news report in The Recorder, the trial pits a Los Angeles deliveryman against the app-based food delivery service. The company is saying that the man is a contractor and therefore, not eligible to be reimbursed for expenses and other protections afforded to employees under California’s labor laws.
Working in the Gig Economy
This is the first court trial that will test whether “gig economy” workers should be treated as employees or as independent contractors. A gig economy is an environment where temporary positions are common and organizations contract with independent workers for short-term engagements. According to a recent study by Intuit, by 2020, about 40 percent of U.S. workers would be independent contractors.
There are several factors that have driven this increase in short-term jobs. In this digital age, the workforce is increasingly mobile where work can be done remotely. This means freelancers can pick and choose from projects around the world. Similarly, employers have the choice to pick the best people for specific projects and they can choose from a larger pool without geographic limitations.
On the other hand, in a gig economy, businesses save significantly in terms of benefits, office space and training. They also have the ability to contract with experts for specific projects. It might cost employers a lot more if they were to hire these experts full-time.
Worker Misclassification Lawsuit
So far, several tech companies including rideshare companies such as Uber and Lyft, have faced similar misclassification lawsuits. However, this one against GrubHub is the first such lawsuit to go to trial. So, what can we expect from this lawsuit? For one, it’s unlikely that the outcome of this trial will determine how GrubHub’s delivery drivers should be classified or how those working in this gig economy should be classified. This is not a class action like other gig economy cases tend to be.
At the heart of the case is whether or not the company had control over its employee, a critical test of an employer-employee relationship. Drivers were required to be available during blocks of time for which they signed up, and could be penalized for not accepting orders. In addition, the driver’s contract with GrubHub also gave the company the right to fire him, which it eventually did. The reality of the situation was that GrubHub drivers had to perform well in order to get the blocks of time they requested.
Protecting Employees’ Rights
It is important to ensure that employees’ rights are not violated especially in this changing labor environment where the laws may not be as clearly spelled out. It is important that employees remain aware of their rights and consult an experienced California employment lawyer at The Haeggquist & Eck Firm if they suspect their legal rights have been violated. In such cases, employees may be able to receive compensation for losses they may have sustained including wages they were owed. They may also be able to seek compensation for emotional pain and suffering.