
GrubHub Drivers Ruled Contractors - sndean
https://www.bloomberg.com/news/articles/2018-02-08/grubhub-drivers-are-contractors-judge-rules-in-bellwether-suit
======
brandonmenc
Drivers are on all of the ride sharing apps, simultaneously. A driver sees two
ride requests - one from Lyft and one from Uber - and selects the one paying
more.

At that point, I don't understand how could anyone argue they are an employee
(in the traditional sense of the word) of either company.

~~~
ProfessorLayton
I believe both Uber and Lyft avoid revealing the destination until a ride is
accepted, to stop drivers from cherrypicking the most profitable rides.
Therefore there is no way to tell which of the two rides will be paying more.

Uber will warn the driver if a ride is especially long and allow them to
decline those, but overall the driver is kept in the dark as to which rides
are more profitable.

Additionally, until recently, Uber punished drivers who declined too many
rides, either by deprioritizing them, or dropping them altogether.

~~~
BookmarkSaver
Valid, but the premise still stands. The driver can sit there on both apps,
and just take the first one that pops up. They aren't "working" for either
company until they voluntarily choose to take a "contract" (maybe not actually
a contract, almost definitely not legally a contract in some technical sense I
would understand, but colloquially).

I do support worker's rights heavily in most cases, I just really feel like
these rideshare cases (and other similar industries, carefully curated) should
be exceptional. It is hard for me to feel like the lack of structure that the
driver's operate under is enough to demand full employment rights.

I'm sure that somewhere in their algorithms, there is a way (or a potential
way) to discriminate/penalize less active or lapsed drivers when they return
to business. But that relatively minor power being said, Uber/Lyft can
literally only control their worker's schedules and availability and hours
using positive profit reinforcement. Like, are you really an "employee" if you
can, without warning or consequence, just not work for a months and then
return just as suddenly? I don't know if "contractor" is the right word, maybe
this should be considered something new like "micro-contractor" or something,
but it operates in a way that is economically and operationally fundamentally
different from traditional employers, including taxi companies.

~~~
jon_richards
>Uber/Lyft can literally only control their worker's schedules and
availability and hours using positive profit reinforcement.

This isn't an acceptable situation because the workers aren't employees. Uber
and Lyft can offer below minimum wage to contractors who don't get their
"positive profit reinforcement". The contractors will then self-enforce
employee-like behaviours in order to get a better wage that _still_ doesn't
have to be above minimum wage.

~~~
BookmarkSaver
And then a large portion of drivers who only drive as a secondary or
supplementary income don't drive, and there is a supply shortage, meaning
prices surge.

~~~
jon_richards
Minimum wage is the acknowledgement that supply/demand is not sufficient for
wage control. Your argument seems more like an argument against minimum wage
in general.

~~~
BookmarkSaver
Yes, I also don't think that Uber/Lyft should necessarily be considered a
means of primary employment.

~~~
wickawic
You should tell that to the majoroty of (my Seattle) Lyft drivers that bought
a Prius just so it could be their primary form of employment. From my personal
experience it is only in the Bay Area that people use ride share as a
supplemental income.

~~~
apercu
Also anecdotal, I've used uber in DC many times, and many, many, many times in
Toronto. Almost every driver I have has was supplementing their income.

------
jstalin
From the ruling by the court:

Other dishonest conduct during this lawsuit further supports the Court’s
finding that Mr. Lawson intentionally manipulated the app to get paid for not
working. During discovery he produced a resume that falsely represents that he
attended a Loyola Marymount University Master of Fine Arts program from August
2012 to May 2015, and even lists a specific grade point average; however, Mr.
Lawson was only enrolled in the program for one year and did not graduate.
When confronted at trial with this misrepresentation, Mr. Lawson testified
that he listed all three years because he was “still involved in various
activities” and he felt “still part of [the Loyola Marymount] community.”
(Dkt. No. 208 at 48:13-16.) This explanation is not credible.

~~~
pbhjpbhj
Is it really material - except in the loosest sense - that a food delivery
driver lied about a Fine Arts course?

That aside, reading the linked court documents that contract has major
problems. It requires deliverers to sign up for a weekly block and to be
available (except under extenuating circumstances) for work, and not refuse
work, during that time. That sounds like being a part-time employee to me,
regardless of the preceding prose specifically disclaiming employee-employer
status (why would they need that I wonder!), and saying the driver was free to
work other gigs. If you're free to work other gigs how can you not often have
to refuse jobs?

I'm not saying Lawson's been harmed, I didn't read enough to know, but that
contract looks like it's demanding exclusive employment for a particular
company within a given time range; that looks terrible for GrubHub from where
I'm sitting.

~~~
saas_co_de
> that contract looks like it's demanding exclusive employment for a
> particular company within a given time range

The ruling specifically says that this is not the case:

"The driver is not precluded from doing business with others and Grubhub does
not have the right to restrict the driver from being concurrently or
subsequently engaged in performing delivery services for other companies, even
those that compete with Grubhub."

I am actually pretty impressed with the efforts Grubhub was making for
compliance here.

"The driver may (1) lease insulated delivery bags from Grubhub in exchange for
wearing Grubhub t-shirts and hats"

Since requiring someone to wear a uniform or use your logo is a strong sign of
an employment relationship they make wearing the uniform consideration for a
separate contract. Clever.

~~~
maxerickson
It's sort of generous to call the imaginary "second" relationship an effort at
compliance.

------
gnicholas
As a (former) lawyer, I know that magistrate decisions do not necessarily
carry the weight of a typical federal judge. And even a district court
decision would not be binding on any other district court. Until an appellate
court weighs in on this, it seems that the issue is very much up for grabs.

I would welcome the more nuanced view of a litigator — I was a transactional
lawyer and am just remembering my law school lessons about precedential
authority.

Edit: corrected an autocorrect.

------
jt2190
> Charlotte Garden, an associate law professor at Seattle University, said
> [U.S. Magistrate Judge Jacqueline Scott] Corley’s decision is a “doubly big”
> win for GrubHub due to California’s relatively high standard for
> establishing workers as independent contractors.

Would someone familiar with the California standards summarize the
contractor/employee test? The article doesn't make specific reference to the
criteria. (I'll hunt the internet now myself, and report back.)

edit: From the California Tax Service Center...

> Does the principal (you) have the right to control the manner and means in
> which the worker carries out the job? The right of direction and control,
> whether or not exercised, is the most important factor in determining an
> employment relationship. The right to discharge a worker at will and without
> cause is strong evidence for the right of direction and control. When it is
> not clear whether you have the right to direct and control the worker, you
> must look further into the actual working relationship by weighing the ten
> secondary factors.

There are secondary tests as well.

[http://www.taxes.ca.gov/iCorE.bus.shtml](http://www.taxes.ca.gov/iCorE.bus.shtml)

~~~
dnautics
This is the strangest part of California labor law:

> The right to discharge a worker at will and without cause is strong evidence
> for the right of direction and control

One usually thinks of a contract worker as being totally de facto
dischargeable (contract says you do N jobs, if I don't like you the N+1th job
doesn't get contracted), whereas an employee as being entirely
nondischargeable due to union agreements or labor laws, but the law itself
says the reverse elsewhere.

P & !P => Q

~~~
dragonwriter
> One usually thinks of a contract worker as being totally de facto
> dischargeable (contract says you do N jobs, if I don't like you the N+1th
> job doesn't get contracted)

That's not dischargeable at will, that's an option to not renew after a set
point.

> whereas an employee as being entirely nondischargeable due to union
> agreements or labor laws

“At will” employment makes employees dischargeable at will (hence the name).
Labor laws add specific _prohibited_ bases, but still make discharge less
restricted than a contract. A union contract is a special case, a contract on
top of general labor laws that covers people who are otherwise regular
employees.

~~~
dnautics
>That's not dischargeable at will, that's an option to not renew after a set
point.

What if N == 1

~~~
dragonwriter
Its still not dischargeable at will, which allows discharging even with a task
incomplete/in-progress.

~~~
dnautics
Hence why I said de facto. Especially in the case of ride-sharing.

------
drtz
We have a round hole and a triangle hole, and we're telling the courts to
decide which one to put the square peg in.

Sooner or later our legislatures are going to have to deal with this issue.

~~~
kelnos
I think that's a very good point. My personal opinion is that considering
drivers "employees" in these scenarios is ridiculous, but it's possible that
"contractor" (as defined by law) isn't a great fit, either.

------
jstalin
Looks like he's also trying to sue Amazon for the same thing.

[https://www.courtlistener.com/docket/4537667/rittmann-v-
amaz...](https://www.courtlistener.com/docket/4537667/rittmann-v-amazoncom-
inc/)

------
swamy_g
Am I in the minority to be appalled by the actions of Lawson (and people like
him)? Clearly, you are not a full-time employee if you are employed on an as-
needed basis.

~~~
tptacek
That doesn't follow at all. I think you're confusing "contractor vs. employee"
with "full-time vs. part-time". Plenty of retail employees are deployed as-
needed, and none of them are contractors.

~~~
harryh
None of those retail employers can clock in and out as they please. "as-
needed" is the wrong phrase for sure because it indicates the choice is in the
hand of the employer. "as-desired" would be better.

~~~
tptacek
It's a weighting of factors argument, right? It's probably not simple (or
these cases would all be finished by now). Counting against the contractor
definition: single, longstanding continuous relationship.

~~~
ewjordan
But most of the driving-giggers that I know do _not_ have single
relationships, they're working with both Uber and Lyft, or GrubHub, Seamless,
Doordash, etc, as each one rises and falls in profitability for them.

------
Bucephalus355
Obviously this is bad for workers in the short-term.

The judge notes however that under California law, you’re either an employee
or contractor, there is no in-between, and she presumably wants to see that
fixed.

This is an old issue that goes way back to Microsoft hiring contractors and
treating them really well like employees, until the IRS discovered they were
also doing it to not pay payroll taxes :(

Afterwards, Microsoft had to significantly dock contractor benefits to show
there was a real distinction and it was not an accounting gimmick.

Like a lot of labor and tax law, these were all put in place 60+ years ago and
have pretty much been stretched to the maximum. Ironically, this makes me see
people going to Law School as in a really cool spot for the future. I thought
I’d never say this, but I can imagine us needing more lawyers in the future to
hammer all these things out for whatever the next de facto American System is.

~~~
woolvalley
Didn't those contractors have to pay payroll taxes through self employment tax
then? The govt gets the same amount of tax in the end AFAIK.

So those contractors basically have ~%8 less pay because they pay the employer
part of the tax, unless MSFT paid them more to compensate.

So what is the incentive for MSFT to do that in the first place? Is it just to
fool the people who don't realize they might be paid less in a complicated
way?

~~~
bzbarsky
Contractors have to pay the "employer" half of FICA (social security and
medicare) themselves, true.

But there are things other than FICA that employers have to pay for employees
but not contractors. The most obvious one is unemployment insurance, both
state and federal. There are likely others, in various location-dependent
ways. Obviously contractors effectively self-insure for unemployment; this is
a major reason why contractors are typically paid more on a nominal basis than
employees are.

In addition to that, there are compliance costs with employees (having to do
tax withholding, pay reporting requirements to states and the IRS, etc) that
are somewhat lower with contractors.

------
cordite
My current company specifically chooses to do employment and not contracts for
drive related services. The thought model is that an employee would be a
better representative for spreading the brand, would have more dedication to
customer happiness, and the available supply of drivers would result in
consistent ETAs.

------
wpasc
I wonder if the plaintiff's, Lawson, case was weakened by the fact that he was
attempting to work as an actor simultaneously and lied on his resume.
Additionally, does the weakness of his case and the precedent that was
established from this verdict affect future cases about contractors vs
employees? If so, I'd be pissed at Lawson if I were a gig worker

~~~
dragonwriter
> Additionally, does the weakness of his case and the precedent that was
> established from this verdict affect future cases about contractors vs
> employees?

A trial court ruling isn't binding authority even on the same court, much less
others, and unless it is (unlikely) a published decision, it won't, IIRC, even
be citable as _persuasive_ authority in other cases.

Now, if it gets appealed and an appeals court rules on the case, things
change...

------
Kiro
Why don't these companies like GrubHub and Uber just hire the people as
employees but with 100% commission based salary? What risk do they take?

~~~
thesimon
Providing minimum wage? Overhead costs? Paid sick leave? Probably pay for
health care insurance?

~~~
kelnos
Also payroll taxes, extra FICA/Medicare taxes, unemployment insurance...

------
sfifs
Is there any way to see the actual ruling? Not finding on search.

~~~
jstalin
[https://www.courtlistener.com/docket/4182349/221/lawson-v-
gr...](https://www.courtlistener.com/docket/4182349/221/lawson-v-grubhub-inc/)

------
not_that_noob
The judge basically punted the issue to the CA legislature. If enough drivers
get together and lobby, I think the legislature may clear up the drivers'
ambiguous position.

------
jahaja
The main thing the so called gig-economy brings to the table is a regression
in workers rights and benefits. That's the core. That's the profits. I can't
understand why people are wilfully accepting that this is somehow the
inevitable result of some smartphone app having been created.

~~~
colechristensen
It's an exchange. The freedom of the gig economy vs. the loss of rights and
benefits. If it's worth it for you take it, if not, don't.

~~~
eropple
Sure. It's an exchange. It's an exchange designed to consign the poor into
being ever poorer. But hey--you get your food delivered for two bucks and you
never have to talk to a person. So that's great.

The "gig economy" is designed to _break employment_. It's designed to turn
people who already are living hand-to-mouth or worse into always-available
scutworkers for the upper class and the (smaller than one would expect) middle
class that serves them in ways the participants in that "gig economy" cannot.
But you can choose to not do it! And when, obviously and inexorably, _that
becomes the game in town available to vast swaths of the working poor_ , what
then? There aren't even any workhouses anymore. Scrooge can't even offer that
whatabout.

Most people may not have much of a choice about feeding themselves (ourselves)
or their (our) kids into the thresher, but the people who do can have the
minimal decency not to oh-but-it's-fine about it. And that includes most
people on HN.

~~~
indubitable
Let's think about money for a minute. Money itself of course has no meaning.
But we apply meaning to it. It essentially works as a proxy for the value we
assign to labor and materials - both of which are finite in reality. So
obviously you'd prefer drivers make more money, so they could live a better
life. Well how much? I imagine you think a ballpark for a 'fair' wage would be
somewhere around $15/ride. Now let's consider your person that relies on taxi
type services for transportation. We'll say they go out and return to their
house once a day. And every other day they also go in/out again for
entertainment, essentials, and so on. For a 30 day month that's a total of 30
x 2 + (30/2) x 2 = 90 trips. And 90 x 15 = $1350. On a yearly basis that's
365.25 x 3 x 15 = $16,436.

Well that's a lot of money. Of course I expect you'd probably say that that's
because the 'bourgeois' are holding back the 'proletariat.' Okay. Let's go
full on social system economics. Let's just pretend the entire GDP in the US
is spread completely evenly between each and every person. And that's quite
unreasonable as our GDP would decrease dramatically under such a system, but
for arguments sake I'll give you that. Okay, that's easy. That's the
GDP/capita or $52k. The total value of all annual goods and services in the US
produced works out to $52k/person/year. But we can't forget about taxes now.
To sustain our social utopia we'd need quite a high tax rate. But again, I'm
going to let you have that and we'll just maintain current taxes. So we're
each taking home about $42k. I'm also going to pretend that state and other
taxes don't exist.

Now look at your $15/ride. If somebody was going to depend on that, they'd end
up spending nearly 40% of their entire income just getting around even with a
perfectly fair share of all income generated nationwide! And I gave you
several unreasonably optimistic assumptions that makes that number a real
lowball. The point here is that even in what I assume is your idealized
system, this would not be a sustainable industry. It's very easy to see things
through the lens of a victim complex because of the apparent inequality of our
society. But these optics are in large part caused by inconceivably large
population numbers. Imagine you earned just $1 from each person on this Earth.
You'd be the 65th richest person in the world! Far from a 1%er, you'd be a
0.000000001%er. Earn $12 and you'd be the single richest person alive. Even if
we just consider the USA. Imagine you took every penny Bill Gates, currently
the richest person in the world, is worth and equally distributed it to each
and every person in the US. That'd be a total of $275. Maybe you would say
well do that to them all! By the time you're down to the 100 richest person
you're only getting $17/person, and again that's for the US population only.

~~~
kalleboo
Yes, it's unsustainable to be privately chauffeured around everywhere if
you're not wealthy. Is this controversial? It's also ecologically and
infrastructurally unsustainable so it's not something anyone actually wants.

Most people in places where wages are livable walk, bike, ride a bus or train
or drive themselves around. For the infirm there are subsidized transportation
services.

~~~
indubitable
It's 'controversial' only in the sense that most people don't understand this.
Many people seem to think that the only reason companies aren't giving great
salaries to people, and 'letting' everybody earn a very good living doing most
of anything, is greed. The person I was responding to went so far as to call
these companies "villains." Or look at the other poster's response to this
very topic. In reality, what people want is impossible, and but very few
understand that. And I think the nature of this fact is often met with
cognitive dissonance of some sort or another, which is sad. We are definitely
becoming a nation that has an increasingly tenuous relationship with facts.

------
WheelsAtLarge
This sux. Gig economy workers are on their own now. I expect a decline in
wages. I thought technology was supposed to help us all.

------
CryptoPunk
A win for contract rights, which is a basic human right.

------
dsfyu404ed
You know what they say:

Bad case, bad case law.

------
djrogers
> Lawson claimed the company violated California labor laws by not reimbursing
> his expenses, paying him less than minimum wage and failing to pay overtime.

I have also failed to do all of those things for Mr. Lawson, fortunately like
GrubHub I did not tell him I ever would.

~~~
longerthoughts
This case aside - if I exclude legally mandated terms when I hire somebody and
they accept the offered terms that doesn't mean I'm exempt from the law.

------
rm_-rf_slash
I think it’s pretty reasonable to state that gig economy employees are
contractors, for the most part. If you set your own hours, then you’re your
own boss.

The problem - in America, at least - is that contractors are denied benefits
like health insurance and pensions/401k plans. But the issue of an inadequate
social safety net is separate and much deeper than a mere employee/contractor
distinction. Otherwise it remains a game of IRS musical chairs.

~~~
ThrustVectoring
>contractors are denied benefits like health insurance and pensions/401k plans

As their own employers, independent contractors can (and probably should) set
up one-participant 401k plans for themselves. This can have significant
advantages, since the "employer" gets to select the terms for the 401k, and
employer-sponsored plans often drop terms that cost less than the value it'd
provide you (eg, in-service Roth conversion + after-tax contributions).

~~~
around_here
They totally should on those sweet less-than-minimum contract wages.

The lives of a high-flying contractor doing skilled work are very, very
different than someone who faces a the "gig" contracts.

~~~
Dylan16807
Totally separate issue. An employment contract with a beautiful, perfect 401k
setup could also pay too little for you to save anything.

