GrubHub Trial Could Set Precedent for Employee Misclassification Lawsuits
GrubHub is on trial for a case of employee misclassification involving its drivers. The drivers allege they were misclassified by the on-demand food delivery app as independent contractors and not as W-2 employees. For its part, GrubHub is arguing that its primary service, which began in 2015, is connecting diners with restaurants and not food delivery. This distinction may distinguish whether the workers are deemed “independent contractors” or “employees.” The trial has been receiving significant coverage from publications such as TechCrunch and Quartz because of its implications to companies that rely on independent contractors to power their companies rather than W-2 employees.
The case of as Lawson v. Grubhub is the first such misclassification suit to make it to trial. Uber is probably the most recognizable company that has been in and out of court for lawsuits stemming from misclassification challenges, but none of those cases have ever gone to trial. The original Uber case occurred in 2015 when a driver, who was classified as an independent contractor but alleged to be an “employee,” had worked “full-time” hours to become eligible for an offer of healthcare from Uber under the Affordable Care Act as an “employee.” This case spiraled off into several other suits brought by Uber drivers seeking to be classified as employees. A recent $100 million settlement involving two class-action lawsuits against Uber in California and Massachusetts resulted in the drivers continuing to be treated as independent contractors. That was a good deal for Uber. An analysis conducted by Recode in 2015 estimated that $209 million would be spent by Uber to reclassify then 45,000 drivers in the state of California alone.
Whatever the outcome of the GrubHub litigation, it is a continuing sign that workers are demanding more. The noise has gotten loud enough to make worker rights a growing issue for regulators and lawmakers to address, from rising pay demands, to stricter regulations around equal pay, to demands for affordable healthcare.
The price for misclassifying workers for ACA purposes can be expensive. Failing to provide insurance to eligible full-time (those that work 30 hours a week) can lead to significant penalties from the IRS.To be sure you are classifying workers properly for ACA purposes, check time and attendance information monthly to be sure part-time workers and independent contractors are not exceeding working hours that would require you to offer health benefits under the ACA. If those workers do exceed those limits in any given month, be sure that they are offered health insurance as required by the ACA to avoid scrutiny from the IRS.
To learn more about ACA compliance in 2020, click here.
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