Who’s in Control?

GrubHub is a company who provides connections between restaurants and delivery drivers classified as independent contractors. GrubHub had a driver, Lawson, who filed a lawsuit claiming he should have been an employee. You might wonder why the classification is such a big deal.

Your HR Survival Tip

If a worker is classified as an independent contractor, there are several wage and hour law perks they didn’t get, such as meal breaks, paid rest breaks, overtime pay, or paid sick leave. If the company was wrong about the classification, the company now has to pay the worker for all those lost benefits over the past 4 years. The company is also responsible for the worker’s payroll taxes, fines, penalties, and attorney fees. Overall, misclassifications can be very expensive.

The GrubHub case was heard in 2017 and GrubHub won. The court provided numerous examples of why that decision was reached. Would the court say the same about your independent contractors? Here are the points made:

• GrubHub exercised little control over the details of Lawson’s work.
• Lawson wasn’t required to have any particular training or orientation.
• GrubHub didn’t conduct performance evaluations.
• Lawson could decide not to work, right up to the moment the time slot he had signed up for was scheduled to begin.
• GrubHub didn’t control when or how Lawson delivered the restaurant orders he chose to accept.
• Lawson decided when and if he wanted to work and for how long (complete control of his schedule).
• GrubHub didn’t control Lawson’s appearance while he made deliveries.

Previous cases have used a 1989 court case as the litmus test for determining whether or not a worker was misclassified. However, a more recent court case referred to the definition of employees found in your Wage Orders, which makes it much easier for the worker to claim he’s an employee. We are currently waiting to hear the opinion of the California Supreme Court on whether that test can be used. If the answer is yes, we’ll all want to review our independent contractors to determine if they should now be employees.

Nearly every company has or will be challenged with determining whether a worker qualifies as an independent contractor. It’s not a decision to be made lightly or just because it’s expedient. Ideally, you should be able to hand over a client or project and say “here’s the scope of work and the deadline.” Then you back off until it’s time to see if the deadline is met and the scope of work completed. Is your relationship with your independent contractor close to this?