Drivers Rack Up Misclassification Settlements, While GrubHub Fights Back

In 1984, the Cars released a sad-sounding song called Drive. I assume it was about a guy longing for a girl, but it’s too depressing to listen to the whole thing. Throughout the song, Ric Ocasek asks “Who’s gonna drive you home tonight?” (Why the long face, Ric? Kidding.)

If you use a ride hailing service, chances are it’s an independent contractor driver who’s gonna drive you home. But in several high profile lawsuits, drivers have challenged their independent contractor status. While these suits have been in the news for years, there have been a recent flurry of high dollar settlements. Earlier this year, Lyft agreed to pay $27 million to a class of 95,000 drivers in California and Door Dash agreed to pay $5 million. Just last week, Postmates agreed to pay $8.75 million.

Notably, none of these settlements resolved the issue of whether drivers for these companies are employees or independent contractors. The settlements involved payouts and agreed-upon changes in company policies, but none of the drivers were reclassified as employees.

GrubHub, on the other hand, has taken a misclassification case to trial. The case being tried is not a class action, and only about $600 is at issue. But the case may have significant ramifications for the status of independent contractor driviers, both at GrubHub and potentially elsewhere, and the case is being watched closely. (You can read more here and here.) As of this morning (9/18/17), the case is still in trial and there has been no verdict.

The point to remember is that companies who use an independent contractor model face a substantial risk of being sued. Plaintiffs’ lawyers are aggressive in recruiting contractors to file lawsuits that challenge their status as independent contractors, arguing that they should be paid as employees instead.

Companies using a contractor model should be proactive. Take steps to evaluate these relationships now. Adjust the facts and contract language to best position your business to defend against a misclassification challenge.

Independent contractor misclassification litigation is active and should be watched closely — unlike the Cars, who broke up in 1988 (for the most part, anyway; you can read more here in the unlikely event you care about the current status of the Cars).

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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