Landmark ruling on gig economy: GrubHub drivers are not employees
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Landmark ruling on gig economy: GrubHub drivers are not employees

GrubHub has come out the winner in a significant court case that not only has huge ramifications for the business, but for the gig economy as a whole. Raef Lawson, an aspiring actor and writer who worked as a GrubHub driver for a few months claimed that the company violated California labour laws by “not reimbursing his expenses, paying him less than minimum wage and failing to pay overtime.” On Thursday, the court ruled GrubHub had done nothing wrong.

GrubHub’s share price has appreciated by more than 130% in the last 12 months!

graph 1502 grubhub

SOURCE: Yahoo Finance

U.S Magistrate Judge Jacqueline Scott Corley in San Francisco, said that gig-economy drivers don’t qualify for employee protection under California law:

“Under California law whether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition. 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.”

This is a huge cause for celebration at GrubHub, and throughout the gig economy too. CEO Matt Maloney said the company was 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.”

The case is particularly notable for a few reasons – not least of which California’s high standard for establishing workers as independent contractors. Charlotte Garden, associate professor of law at Seattle University, described it as a “double win” for GrubHub, saying: “If they can make it here, they can more likely make it anywhere. It is also the first federal court to reach a verdict on whether workers in the gig economy are employees or not, so companies like Uber and Lyft will also be celebrating this win.”


Dominion holds GrubHub in its Global Trends Ecommerce Fund.

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