What Does GrubHub’s Big Win Mean for Other On-Demand, Sharing Economy Businesses?

From the Independent Contractor Misclassification and Compliance Legal Blog, Richard Reibstein offers a superb, thorough analysis of the decision that a Grubhub worker was an independent contractor. Richard reviews the court’s decisions and provides his analysis and takeaways. Richard writes:

The Court’s “Upshot” and “Conclusion”
Judge Corley then penned a section of the opinion she called “The Upshot.” Interestingly, this section confirms that “the facts make the case.” In this section, Judge Corley compared this case with the 2006 case of JKH Enterprises, which the court said “has facts similar to those the Court has found here.” Yet, the judge then proceeded to distinguish and differentiate the facts in that similar case from those in the GrubHub case.
Judge Corley’s “Conclusion” was short and succinct: “Based on what the Court observed at trial and the facts found, and after applying the Borello test, the Court finds that the four months Mr. Lawson performed delivery services for GrubHub he was an independent contractor.”
Analysis and Takeaways
This case will have more impact in the media and among gig economy commentators than it may have legally. As noted in a prior blog post after the trial in this case: “Cases of this nature dealing with a single individual frequently turn on their particular facts, which can differ from case to case. Differing facts often lead to different results regarding the proper classification of workers. Thus, where the evidence varies from one case to the next, another court may reach a different decision in other cases involving drivers or other on-demand workers providing services to companies in the gig economy. Indeed, the decision in this case may not even be a precedent for other drivers at GrubHub.”
So, how much precedential value will other courts give to this case? Just as Judge Corley “distinguished” the facts in JKH Enterprises from those in this GrubHub case, plaintiffs’ lawyers in the next on-demand sharing economy IC misclassification case are likely to try to distinguish the facts in their case from those here. Meanwhile, lawyers representing the business in the next such case will likely argue that their facts are close enough to the facts in this GrubHub case that the result here should govern in their case.
The lack of precedential value is more pronounced in cases that might be fairly be characterized as falling in the “gray“ area – where some facts favor independent contractor status and other facts favor employee status. In those types of cases, a difference in one or more key facts can sometimes completely change the outcome of a legal decision as a matter of law. Moreover, where the facts on key issues are in dispute, the court has to decide which witnesses to credit and which to discredit, and that determination can critically affect the outcome of a case. As noted above, the decision in this case by Judge Corley was undoubtedly influenced to some degree by her conclusion that Lawson was not a credible witness.
But, the judgment in GrubHub’s favor most assuredly signals that an on-demand sharing economy business can lawfully be structured on an independent contractor model. To that end, GrubHub prevailed in large part because it structured, documented, and implemented its IC relationships with an eye on compliance with IC laws.