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.)

 

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
Continue reading

wage and hour law California overtime compensation

Unpaid Wage and Hour Law

Wage And Hour Law – California

wage and hour law California overtime compensationMany California employees are not being justly compensated for their work. Our attorneys are aware that some of the most common issues that arise in wage and hour law disputes involve:

Unpaid wages — Harsh penalties are in place for California employers who fail to pay their workers. This includes paying a worker the balance of wages earned immediately upon being terminated and within 72 hours of the worker leaving the company.

Overtime and misclassification — Workers are either classified as hourly or salaried, depending on their job description, daily responsibilities, and role within the company. Many employers list workers as salaried, paying a lump sum, no matter how much time was served. Salaried workers, however, are not commonly eligible for overtime. If you should be classified as an hourly employee or worker, you could be missing significant compensation for time you work over 40 hours a week or 8 hours per day. In addition, double time could apply over 12 hours per day in some cases.

Reimbursement and vacation time — In addition to the above, there is strict protocol for how employees are to be reimbursed for certain expenses such as cell phone usage, mileage, uniforms, etc. In many cases, this includes vacation time that has been accrued on hours worked and must be paid out if the employee leaves the company.

To learn more about unpaid wage and hour law in California, visit Unpaid Wages.

Two Prevailing Parties in a Single Wage and Hour Lawsuit?

California Second District Appellate Court Says Yes…

Rules both the employee and the employer can be deemed “prevailing party” in a single Wage and Hour and Equal Pay Act lawsuit.

Background

Plaintiff, Mahta Sharif, brought an action against her former employer, Mehusa, Inc., for unpaid overtime (Lab. Code, § 1194), unpaid wages (Lab. Code, § 201), and violation of California’s Equal Pay Act (Lab. Code, § 1197.5). Sharif wage and hour lawsuit | California lawyer, Kingsley & Kingsley, Encino, CAprevailed on her Equal Pay Act claim with the jury awarding her $26,300 while Mehusa prevailed on Plaintiff’s overtime and wage claims. Sharif later filed a cost memorandum and was awarded her costs. She also filed a motion for attorney fees in the amount of $280,432 under Labor Code section 1197.5(g) as the prevailing party on her Equal Pay Act claim. Her request for attorney fees consisted of a lodestar amount of $140,216 and a multiplier of two. Mehusa filed a motion for attorney fees and costs under Labor Code section 218.5 in the amount of $36,982.24 as the prevailing party on Plaintiff’s wage claims. Mehusa estimated that 75% of defense counsel’s time was spent defending against Continue reading

Legal Liability and Final Paychecks to Departing Employees

Issuing Final Paychecks to Departing Employees

Many tasks must be handled properly when employment ends, especially the tasks related to the accurate and timely issuance of the employee’s last paycheck. Companies operating without proper procedures, or those just unaware of the rules may dock final employee paychecks due to excess sick days, dress code violations, or missing property and equipment.  final paychecks | Kingsley & Kingsley employment lawyers, Encino, CAAnd while violations of company policy or the established code of conduct may warrant docking an employee’s pay, a company is best served if it avoids undue hassle with a departing employee and remains professional throughout the entire termination process. Even when an involuntary departure is triggered by a rule violation or performance problem, the employer should  minimize the risk of legal liability, while not providing the departing individual with another reason to file an administrative claim or lawsuit.

Federal Law Governing Final Paychecks

The last paycheck should include compensation for all time worked. Best practices discourage extraordinary deductions from final paychecks, while the Fair Labor Standards Act (FLSA) prohibits such deductions from overtime pay. Additionally, nonexempt employees must be paid at least minimum wage for all regular hours worked.

Exempt employees’ final paycheck should not reflect extra deductions for discipline, missing equipment,  or property violations. If an employee’s last week is less than a full workweek, however, the FLSA allows organizations to prorate the final paycheck and cover only days worked.

Whether an employee is exempt or nonexempt, the FLSA does not require employers to immediately issue the final paycheck; rather, they may wait until the next regular payroll.

Importance of State Law

Usually, federal law preempts state law. However, generally speaking, state law governs with wage-hour law when state law is more generous to employees. Thus, some states require immediate payment upon termination. From an employer perspective, California is one of the strictest states in the nation when it comes to final-payment rules as final checks must be given to the employee upon termination, or within 72 hours if the worker resigned. If an employee has given more than 72 hours’ notice, the check must be presented on the last day of employment.

Violating state laws on final payments, even out of ignorance, can be costly for employers. In some states, if an employer fails to pay a departing worker within the legal time requirements, it may have to pay additional penalties and interest, along with any attorney fees and legal costs the employee incurred in seeking payment.

Vacation Time and Sick Pay

The Fair Labor Standards Act (FLSA) does not determine whether unused vacation time or sick leave should be included in the final paycheck. Once again, state law governs and in California, accrued paid time off is considered part of earned compensation and must be included in a last payment. In states where an employer is able to set its own rules, an employee handbook is an ideal place to specify whether unused vacation time or sick pay is earned and payable to exiting employees. Legalistic distinctions based on “for cause” terminations are ill-advised. Remember, employers should remain as gracious as possible and are advised not act in a manner that may cause controversy.

For Assistance and Support

For more information, visit the California Department of Industrial Relations‘ website or contact the experienced employment attorneys at Kingsley & Kingsley with specific questions or concerns. Furthermore, if you believe that you have been denied certain wages, or unfairly received a late paycheck, an experienced employment lawyer may be able to help. If you have questions or concerns about your rights, contact the experienced employment lawyers at Kingsley & Kingsley by calling us toll-free at (888) 500-8469 or by clicking here to contact us via email.

final paychecks - late paychecks? Encino, CA | Contact an experienced California attorney, Eric Kingsley

 

 

 

 

 

 

 

Kingsley & Kingsley

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

Late Paychecks Violate FLSA

Late Paychecks Violate Fair Labor Standards Act (FLSA)

late paychecks | California lawyers, Kingsley & Kingsley - Encino, CAFrom start-up to the most experienced small business, companies of all sizes can run low on cash due to late receivables or unexpected large expenses.  It is in those situations, that some employers may delay payroll to ease the burden created by cash flow problems.  If the poor financial condition of your employer’s business caused you to receive a late paycheck or no paycheck at all, your employer may have violated the Fair Labor Standards Act (FLSA), also known as the wage and hour law.

Case in Point – The Federal Government

In Martin v. United States, the federal government paid its workers approximately two weeks late because of the government shut down in October 2013. A week after the shutdown ended, a group of federal government employees filed suit alleging violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201-219. On July 31, 2014 the U.S. Court of Federal Claims ruled that late paychecks resulted in a violation of the FLSA. The court concluded that the FLSA is violated when an employer fails to pay its employees all wages due on the regular pay day.  And while the employees got their paychecks, they were entitled to liquidated damages in an amount equal to the late payments, plus attorneys’ fees.Continue reading