302 F. Supp. 3d 1071
N.D. Cal.2018Background
- Plaintiff Raef Lawson delivered for Grubhub in Los Angeles from Oct 25, 2015 to Feb 14, 2016 (≈4 months), signing a Delivery Service Provider Agreement that labeled him an independent contractor.
- Lawson scheduled work via Grubhub "blocks," used his own car and phone, could and did work for competitors (Postmates/Caviar) during Grubhub blocks, and often toggled availability late or otherwise manipulated the app to receive guaranteed "true up" pay.
- Grubhub paid per-delivery in theory but in practice guaranteed minimum hourly pay for qualifying blocks (the "true up"); it set zones, offered blocks, controlled fee offers, and could terminate the agreement (mutual 14‑day termination).
- Grubhub provided optional training materials, conducted background checks, and had limited enforcement (e.g., priority scheduling, removal from blocks if outside zone), but did not direct routes, appearance, or most details of performance.
- Grubhub terminated Lawson for material breach after evidence he was frequently unavailable during scheduled blocks; the court found Lawson not credible on key points (including app manipulation and misrepresentations).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lawson was an employee or independent contractor under California common law (Borello) | Lawson argued Grubhub exercised sufficient control and the work was part of Grubhub's regular business, so he was an employee entitled to wage, overtime, and expense-reimbursement protections | Grubhub argued drivers controlled manner/means (scheduling, routes, equipment), were episodic, provided their own tools, and thus were independent contractors | Held for Grubhub: applying Borello, overall factors show independent contractor status during Lawson's tenure |
| Weight of "right-to-control" factor (manner & means) | Lawson: Grubhub set blocks, fees, zones and could discipline/terminate, evidencing control | Grubhub: those rights governed results, not the manner/means; drivers chose blocks, routes, and hours; little day-to-day supervision | Held: right-to-control favors independent contractor (Grubhub lacked control over manner/means) |
| Significance of method of payment and true-up guarantee | Lawson: true-up (hourly guarantee) and practice of paying minimum wage show employer-like hourly pay | Grubhub: true-up was incentive reflecting lack of ability to compel work; payment was conceptually per-delivery | Held: payment factor slightly favors employee (true-up paid like hourly), but is not dispositive |
| Effect of mutual termination/at-will clause on classification | Lawson: at-will termination supports employer control | Grubhub: mutual termination and drivers' ability to stop work anytime mitigate control concerns | Held: termination right is neutral here (given drivers' low investment and episodic work) |
Key Cases Cited
- S.G. Borello & Sons, Inc. v. Dept. of Indus. Relations, 48 Cal.3d 341 (Cal. 1989) (sets multi-factor common-law test for employee vs independent contractor)
- Alexander v. FedEx Ground Package Sys., Inc., 765 F.3d 981 (9th Cir. 2014) (right-to-control is primary Borello consideration in delivery-driver context)
- Ruiz v. Affinity Logistics Corp., 754 F.3d 1093 (9th Cir. 2014) (application of Borello factors to delivery drivers; emphasis on control)
- Ayala v. Antelope Valley Newspapers, Inc., 59 Cal.4th 522 (Cal. 2014) (employee status governs availability of Labor Code and PAGA remedies)
- Iskanian v. CLS Transportation Los Angeles, 59 Cal.4th 348 (Cal. 2014) (PAGA standing principles and employee status relevance)
- Linton v. DeSoto Cab Co., 15 Cal.App.5th 1208 (Cal. Ct. App. 2017) (application of Borello to wage/expense claims)
- Narayan v. EGL, Inc., 616 F.3d 895 (9th Cir. 2010) (termination-at-will is a significant Borello factor)
- Millsap v. Fed. Express Corp., 227 Cal.App.3d 425 (Cal. Ct. App. 1991) (distinguishes control over result from control over manner/means)
- JKH Enters. v. Dept. of Indus. Relations, 142 Cal.App.4th 1046 (Cal. Ct. App. 2006) (courier cases where regular routes and permanence supported employee classification)
- Estrada v. FedEx Ground Package Sys., Inc., 154 Cal.App.4th 1 (Cal. Ct. App. 2007) (high hirer control with significant driver investment supports employee status)