Grubhub Independent Contractors

Judge Rules Grubhub Drivers Independent Contractors Not Employees

In a significant court decision on the status of gig-economy workers, U.S. Magistrate Judge Jacqueline Scott Corley concluded on February 8, 2018, that drivers for Grubhub Inc. are independent contractors and not employees under California law. The ruling may have implications for other sharing economy companies, including Uber and Lyft, whose business models are built on pairing customers with products and services through apps while avoiding the personnel costs of traditional employment.

Lawson v. Grubhub Inc.
The case against Grubhub was brought by Raef Lawson, who worked as a food-delivery driver for less than six months while pursuing a career as an actor and writer. In 2015, Lawson sued Grubhub claiming the company violated California labor laws by not reimbursing his expenses, paying him less than minimum wage and failing to pay overtime. Lawson claimed he should have been classified as an employee, not a contractor.

The case was originally filed as a proposed class-action lawsuit, but the judge never granted that status, so it was only limited to him and his claimed $600 in damages–consisting of back wages, overtime, and expense reimbursement. Both sides had agreed that Judge Corley, rather than a jury, would decide the case in her San Francisco federal courtroom. Closing arguments were heard in late October 2017.

Borello Test
A key element of the case centered around the Borello test, which is used to determine whether a worker is a 1099 contractor or a W-2 employee. The Borello test considers workplace circumstances like whether the work performed is part of the company’s regular business, the skills required to do the job, payment methods, and whether the work is done under the supervision of a manager.

Elements of the case in Lawson’s FavorGrubhub Independent Contractors “Grubhub did control some aspects of Mr. Lawson’s work,” Judge Corley commented. “Grubhub determined the rates Mr. Lawson would be paid and the fee customers would pay for delivery services. While the Agreement states that a driver may negotiate his own rate, this right is hypothetical rather than real. The Court finds that Mr. Lawson could not negotiate his pay in any meaningful way and therefore this fact weighs in favor of an employment relationship.”

Elements of the case in Grubhub’s Favor
In Judge Corley’s estimation, in addition to working for other gig economy companies while simultaneously working for Grubhub, Lawson was fundamentally “not credible.” By his own admission, Lawson “gamed the app” by scheduling himself for a work shift (a “block” in company parlance) but received few, if any, actual delivery orders by putting his phone in airplane mode, among other tactics.

“Mr. Lawson’s claimed ignorance of his dishonest conduct is not credible,” Judge Corley wrote. “Mr. Lawson would remember if after he filed this lawsuit against Grubhub he cheated Grubhub. If he had not moved his smart phone to airplane mode, intentionally toggled available late, or deliberately engaged in other conduct to get paid for doing nothing he would have denied doing so at trial. But he did not.”

Other aspects that were not in Lawson’s favor of being treated as an employee included 1) he could set his own schedule, 2) largely wear whatever clothes he wanted, and 3) he could choose his own route.

The Decision
Under California law, whether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition,” Judge Corley concluded.

“If Mr. Lawson is an employee, he has rights to minimum wage, overtime, expense reimbursement, and workers compensation benefits. If he is not, he gets none. With the advent of the gig economy and the creation of a low-wage workforce performing low skill but highly flexible episodic jobs, the legislature may want to address this stark dichotomy. In the meantime the Court must answer the question one way or the other. Based on what the Court observed at trial and the facts found, and after applying the Borello test, the Court finds that during the four months Mr. Lawson performed delivery services for Grubhub he was an independent contractor.”

Reaction
Shannon Liss-Riordan, Lawson’s lawyer, said she plans to appeal the ruling. “Among other issues, the California Supreme Court is considering adopting a more protective test for employee status, so I was surprised the decision was issued before the Supreme Court has issued that decision…we should have prevailed even under the Borello standard,” Liss-Riordan said. 

Matt Maloney, chief executive officer of Grubhub, said the company is pleased with the ruling, “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,” Maloney said.

Conclusion
People who work as 1099 contractors can set their own schedules, and decide when, where and how much they want to work. Employers utilizing 1099 contractors avoid paying taxes, overtime pay, benefits and workers’ compensation. However, some companies have recognized that some people don’t want to be independent contractors, and prefer the benefits that come with employee status. 

Additional Resources: Daily Journal article by Eric B. Kingsley: Let’s talk about a ‘hybrid’ worker. 

Employers are advised to review independent contractor relationships and evaluate agreements with third parties, and contact an employment lawyer with questions. To discuss these laws, or a potential claim on your behalf, feel free to call us toll-free at (888) 500-8469 or click here to contact us via email.

Kingsley & Kingsley

16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

 

six flags overtime pay class action

Overtime Pay Meal Rest Breaks at Heart of Six Flags Class Action

Earlier this month, a California court judge issued a tentative decision denying certification of eight subclasses of amusement park workers in Case No. BC505344, Villegas v. Six Flags Entertainment Corp.  Los Angeles Superior Court Judge Ann I. Jones did however suggest she would consider certification of several others pending further briefing. 

Background

In April of 2013, plaintiffs Andrew Villegas, Jennifer Gilmore, Dustin Liggett and Hans Gundelfinger, all former Six Flags employees, filed a putative class action accusing their former employer of numerous labor law violations, including failure to pay employees overtime wages, provide mandatory meal and rest breaks or proper seating. The four plaintiffs sought to represent a class of current and former Six  Flags Magic Mountain and Hurricane Harbor employees who worked at the parks located north of Los Angeles.

The plaintiffs worked as ride mechanics, ride operators and game attendants at Six Flags Magic Mountain and Hurricane Harbor between August 2005 and July 2012, according to the lawsuit. Around the time of the original lawsuit, the parks employed approximately 39,000 seasonal employees (2012), compared to about 1,900 full-time employees. 

Class Certification

Six Flags Magic Mountain opposed the plaintiffs’ motion for class certification citing a lack of evidence of common issues–a particular requirement for class certification. Magic Mountain cited the significant number of employees working various jobs, specifically 25,000 employees, 25 different departments, and 255 positions.  

Numerous subclasses have been defined in this case:

  • “shaved time” subclass – a class consisting of workers whose wages were not fully paid
  • “walking time” subclass – a class consisting of workers who were not compensated for time spent walking to break areas
  • “rounding subclass” – a class consisting of employees whose hours were manually reduced
  • “regular rate subclass – two subclasses consisting of employees whose overtime rates were based on hourly rates, not “regular rate of pay”six flags overtime pay class action

Superior Court Judge Jones issued a tentative decision denying certification for the majority of the subclasses, including the “shaved time” and “walking time” subclasses. However, the judge suggested she would, upon additional briefing, consider certification of additional classes, namely the “rounding subclass” and two “regular rate subclasses”. As with the tentative ruling, judge Jones is sure to closely evaluate the presence of, or lack of commonality across each subclass as examples are brought forth by the plaintiffs.  

The experienced California employment lawyers at Kingsley & Kingsley will continue to follow this case and related class action cases dealing with California or national labor laws. In the meantime, to discuss these laws, or a related claim on your behalf, feel free to call us toll-free at (888) 500-8469 or click here to contact us via email.

Kingsley & Kingsley

16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

 

overtime rule DOL

DOL Overtime Rule Struck Down by Texas Judge

Decision strikes another blow to Labor Department’s “overtime rule”

On August 31, 2017, a federal judge in Texas struck down the controversial change to the Fair Labor Standards Act that was intended to substantially raise the minimum salary threshold required for employees to qualify for the “white collar” exemptions. The same federal court that had issued a preliminary injunction in November 2016 blocking implementation of the Obama Administration’s revised overtime rule, granted the plaintiffs’ motion for summary judgment, ending the case and leaving the injunction in place.overtime rule DOL

Background

In May 2016, the U.S. Department of Labor (DOL) unveiled the details of its final revised regulations defining the “white collar” exemptions from the federal Fair Labor Standards Act’s (FLSA’s) overtime and minimum-wage requirements. The three primary tenets of the regulations included:

  • the minimum salary threshold an employer must pay in order to characterize an employee, otherwise meeting the duties requirements, as exempt would increase from $455 to $913 per week, (up from $23,660 to $47,476 per year.
  • the minimum salary amount would be “updated” every three years (likely increased), with the first update scheduled for January 1, 2020.
  • new regulations to take effect December 1, 2016.

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minimum wage laws

Current Minimum Wage Laws In California

California Minimum Wage Laws minimum wage laws

Effective January 1, 2017 the minimum wage for all industries in California is $10.50 per hour for employers with 26 or more employees and remains at $10 per hour for employers with 25 or fewer employees. However, depending on where you work, your employer might be required to pay you more than the state minimum wage.

Background on California’s Minimum Wage Increases

On April 4, 2016, California Governor Jerry Brown signed a new minimum wage bill. The bill raised the state’s minimum wage for employers with more than 25 employees to $10 per hour effective July 1, 2016 and $10.50 per hour effective January 1, 2017. The minimum wage will then increase by an additional $1 per hour every year until it reaches $15 in 2022.

Date                         Minimum Wage for Employers with 25 Employees or Less Minimum Wage for Employers with 26 Employees or More
January 1, 2017 $10.00/hour $10.50/hour
January 1, 2018 $10.50/hour $11.00/hour
January 1, 2019 $11.00/hour $12.00/hour
January 1, 2020 $12.00/hour $13.00/hour
January 1, 2021 $13.00/hour $14.00/hour
January 1, 2022 $14.00/hour $15.00/hour
January 1, 2023 $15.00/hour  

City or County Minimum Wage Laws

Since California’s current law requires a higher minimum wage rate than does the federal law, all employers in California who are subject to both laws must pay the state minimum wage rate because it is higher; unless their employees are exempt under California law. In the same respect, if a city or county has adopted a higher minimum wage, employees must be paid the local wage if it is higher than the state or federal minimum wage.

Several California cities have adopted such ordinances which establish a higher minimum wage. Many of these ordinances called for an increase effective July 1, 2017. This means that employees should be paid more if they are working within one of these local jurisdictions. Local governments that have increased the minimum wage effective July 1, 2017 include:

Los Angeles City
For Employers with 26 or More Employees: $12/hour   For Employers with 25 or Fewer Employees: $10.50/hour

Los Angeles County (Unincorporated Areas)
For Employers with 26 or More Employees: $12/hour

Malibu
For Employers with 26 or More Employees: $12/hour
For Employers with 25 or Fewer Employees: $10.50/hour

Pasadena
For Employers with 26 or More Employees: $12/hour
For Employers With 25 or Fewer Employees: $10.50/hour

San Francisco
$14/hour

San Jose
$12/hour

San Leandro
$12/hour

Santa Monica
For Employers with 26 or More Employees: $12/hour
For Employers with 25 or Fewer Employees: $10.50/hour

US City and County Minimum Wage Ordinances

California Employment Law

California employers should ensure compensation plans are compliant with local, state and federal laws. Similarly, employees in California should keep abreast of wage laws to ensure they are compensated appropriately under California law.  Should you have questions about California’s employment laws, don’t hesitate to contact leading California employment lawyers at Kingsley & Kingsley. Call and speak to an experienced California lawyer toll-free at (888) 500-8469 or click here to contact us via email.

More information on wage and hour laws in California.

Kingsley & Kingsley

16133 Ventura Boulevard, Suite 1200
Encino, California 91436
Phone: 888-500-8469
Local: 818-990-8300 (Los Angeles Co.)

On-call pay

Compensable “On-Call” and “Stand By” Time

“On-Call” and “Stand By” Time  On-call pay

California employers are obligated to pay the wages of an hourly employee for all time that the employee is under the control of the employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so. In Industrial Welfare Commission Orders 4 and 5, there is a modified definition of hours worked for specified occupations. (Industrial Welfare Orders, § 2)

On-call or stand by time at the work site is considered hours worked for which the employee must be compensated even if the employee does nothing but wait for something to happen. For example, when an employee is required to remain at work to respond to emergencies or other unforeseen incidents, such time is considered work time, even if the employee is doing nothing more than waiting around for something to happen. Even when an employee leaves the employer’s premises while on call, but the employee’s time is restricted (such as a requirement to respond to all calls within 15 minutes) in that the employee cannot engage in personal activities, such time will generally be considered work time.

In contrast, if an employee can choose whether to respond to a call or the response requirements allow the employee to engage in personal activities and come and go as he or she pleases, such time should generally not be considered work time.

Factors That Determine On-Call Pay
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wage and hour bills in california legislature

Wage and Hour and Parental Leave Bills Headed to Appropriations Committee of California Legislature

Increase in Minimum Exempt Salary wage and hour and parental leave bills in california legislature
AB-1565 (Thurmond) proposes to increase the minimum exempt salary to $47,472 annually. Specifically, the bill exempts an executive, administrative, or professional employee, as defined, from overtime compensation if the employee earns a monthly salary equivalent to either $3,956 or an amount no less than twice the state minimum wage for full-time employment, as defined, whichever amount is higher. This bill appears to be a reaction to the failed U.S. Department of Labor’s proposed overtime regulation, which was scheduled to take effect in December of 2016, but was put on hold by a court injunction. California’s minimum salary level for exempt employees is already scheduled to exceed $49,000 by 2019 for businesses with 26 or more employees. AB 1565 would accelerate the time table by one year.
Status:  The bill passed in the state assembly on May 30, 2017, and was re-referred to the Appropriations Committee on June 28, 2017.  Continue reading