GrubHub Says It Is Not a Food Delivery Company – Are Workers Suffering?

When you think of food delivery, what is the first thing that comes to mind? For most, the answer is probably pizza, or Chinese food. But ever since the rise of the Internet, other companies have jumped into the delivery game, including the online giant GrubHub. GrubHub describes itself as a premiere marketplace connecting diners with restaurants. But apparently, according to a recent lawsuit, the company does not see itself as a delivery company. Its employees disagree.

The Lawsuit Against GrubHub

GrubHub was sued in 2015 as part of a wave of lawsuits against what some call “gig economy” firms. The question at hand: are those who work for “gig economy” companies like GrubHub or Lyft employees or independent contractors?

Depending on the outcome of the case, Lawson v. GrubHub, workers for these companies could be entitled to a variety of benefits. These include unemployment, insurance and reimbursements for things like gas and employee phone bills. Workers for GrubHub involved in the lawsuit claim that their classification as contractors is a violation of California’s employment laws.

The Borello Test

The Borello test is used to determine whether a worker is a 1099 contractor or a W-2 employee. It looks at things like whether a person’s work is part of the company’s core business, the skill required, payment method and whether the work is done under a manager’s supervision. To prove its claim that its workers are, in fact, independent contractors, GrubHub must make the case that food delivery is not its core business.

Is GrubHub a delivery service? One can certainly make that case. Much of its advertising and financial reports suggest delivery is the core business. But GrubHub has not been delivering itself for long – it started in 2015. Despite this, these past two years have seen the company double down on delivery, absorbing companies like Seamless and Eat24.

Whatever the outcome, this case will have major implications for workers at gig economy businesses and other on-demand tech companies.

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