The first court trial to test whether "gig economy" workers should be treated as independent contractors or employees got underway Tuesday in what could be seen as the culmination of a series of legal battles that have dogged Silicon Valley.
The trial pits Los Angeles delivery man and struggling actor Raef Lawson against app-based food delivery service GrubHub Inc. The company argues that Lawson is a contractor and therefore not entitled to expense reimbursement and other protections afforded to employees under California labor law. GrubHub is represented by team from Gibson, Dunn & Crutcher, led by partners Theodore Boutrous Jr., Theane Evangelis and Michele Maryott.
Lawson's lawyer, Shannon Liss-Riordan of Boston labor law firm Lichten & Liss-Riordan, has carved out a niche filing worker misclassification suits against companies offering services at the press of a button—from ride-hailing giants Uber and Lyft, to the lesser-known outfits such as Washio and Caviar.
So far, however, none of those lawsuits have led to a trial. Here are a few takeaways from Tuesday's opening arguments:
1. This won't decide how the whole gig economy, or even all GrubHub delivery drivers, should be classified.
"What I want to emphasize is that we're not going to take on the whole 'gig economy' in this trial," Liss-Riordan told U.S. Magistrate Judge Jacqueline Corley of the Northern District of California, who is presiding over the bench trial. "We are biting off a piece of it."
Unlike most of the other gig economy cases, Lawson's is not a class action. Corley denied class certification last year–meaning that, in economic terms, this case alone doesn't pose huge risk to GrubHub. Lawson claims he was shortchanged just $586.56 (although his suit also includes a potentially valuable claim under the Private Attorneys General Act).
GrubHub, Liss-Riordan noted, may have "tweaked" its practices since she filed suit—meaning that the verdict won't necessarily apply to other drivers for the company. But the result will have at least symbolic significance for GrubHub and other companies that have similar models. The company's legal lineup seems to suggest it recognizes the potential weight of the case.
2. It's all about control.
During her opening arguments, Liss-Riordan stressed the various ways in which GrubHub had "control" over Lawson—a critical test of an employer-employee relationship under a 1989 California Supreme Court decision known as Borello. Drivers were required to be available during blocks of time that they signed up for and could be penalized for not accepting orders. Lawson's contract with GrubHub also gave the company the right to fire him (which it ultimately did). And while Lawson could nominally choose when he worked, in reality GrubHub drivers had to perform well to get the blocks they wanted, Liss-Riordan argued. "The way you might see a waiter hustling with a manager" for a better shift, she said.
Delivering GrubHub's opening statement, Boutrous pointed to that the fact Lawson sometimes drove for competing delivery services like Postmates and Caviar while simultaneously on shift with GrubHub. That, Boutrous argued, shows that Lawson was free to do what he wanted. "Someone working at Starbucks couldn't just walk across the street to Peet's," Boutrous said.
He also pointed to Lawson's contract with GrubHub to suggest that delivery drivers were actually encouraged to work for competitors. "GrubHub understands that [the driver] may increase its profitability and reduce its risk of loss by performing such concurrent service," the provision reads.
3. Smartphone tracking makes for interesting evidence.
GrubHub—like other gig economy companies—tracks its workers' movements using its smartphone app. For a trial that focuses on how much control a company had over someone, it turns out that data can cut both ways.
For Lawson's case, Liss-Riordan said GrubHub would prod drivers if they hadn't logged into their app and their time block started (It would do likewise if they signed out early). She also said that, when Lawson was out making deliveries and took a break to go to the bathroom, GrubHub noticed he wasn't moving and contacted him to ask what he was doing.
But Boutrous pointed out that, according to GrubHub's tracking, Lawson spent one whole time block on the platform while at home. He could also choose to work within a given area—as opposed to taking delivery runs across the city. "That's a big dose of freedom," Boutrous said.