This $586.56 San Francisco Lawsuit Could Destroy The Entire 'Gig Economy'

Tyler Durden's picture

When Raef Lawson filed his $586.56 lawsuit in San Francisco he probably didn't realize he could potentially end up disrupting the entire 'gig economy' that subsidizes a plethora of Silicon Valley tech giants from Uber to DoorDash, but that could very well end up being the outcome. 

As Yahoo points out today, Lawson used to be a delivery driver for GrubHub but now he finds himself at the epicenter of an ongoing legal battle over whether 1099 contractors working for firms GrubHub and Uber should really be counted at employees rather than independent contractors.

In a windowless, 15th-floor courtroom in downtown San Francisco last week, GrubHub was defending its 1099 independent contractor employment model for its delivery drivers.


There's no verdict yet, and there probably won't be for at least another week. This trial, Lawson vs. GrubHub, is looking to determine whether or not plaintiff Raef Lawson, an ex-GrubHub driver, was misclassified as an independent contractor while delivering food for GrubHub.


Lawson's lawyer, Shannon Liss-Riordan (pictured below), has spent a good chunk of time in this trial focusing on the amount of control she perceived GrubHub to have over Lawson during the time he delivered food for them. She's trying to prove that Lawson's employment met the conditions of the Borello test, which looks at circumstances like whether the work performed is part of the company’s regular business, the skill required, payment method and whether the work is done under supervision of a manager. The purpose of the test is to determine whether a worker is a 1099 contractor or a W-2 employee.



Of course, the entire business model for companies like Uber hangs in the balance as adding 1,000s of employees to their own payrolls would drastically change, if not completely destroy, their business model. 

For now, these employers bring on 1099 contractors to avoid paying taxes, overtime pay, benefits and workers' compensation.  But, if that were to change, the cost of that Uber trip would suddenly look a lot like your taxi fare from 10 years ago.

Those who work as 1099 contractors can be their own bosses, meaning they can set their own schedules, and decide when, where and how much they want to work. Being a 1099 contractor can also be a solid, lucrative side-hustle because you could theoretically work for several companies at once. As noted in this trial, Lawson also delivered food for other gig economy startups, including Postmates. For employers, bringing on 1099 contractors means they can avoid paying taxes, overtime pay, benefits and workers' compensation.


Although Lawson only seeks a small, estimated sum of $586.56, the result of the trial could potentially affect the employment models of companies like Uber, Lyft, Postmates, Caviar, DoorDash and many others.

Perhaps that's why it makes sense that, as Yahoo points out, Uber's undoubtedly high-paid "employment counsel team" has suddenly taken a very active interest in a tiny $500 lawsuit.

On day one, I noticed a member of Uber's employment counsel team watching closely, taking notes about the trial. That makes sense, given Uber has found itself as the defendant in similar lawsuits that have ultimately been settled before needing to go to trial.

But, who knows if we'll ever see a verdict in the Lawson vs. GrubHub trial...for some odd reason these types of cases keep get settled before a judge can rule on them.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
buttmint's picture

...Banditos, all!

custard's picture

URGENT.... Donald Trump is being covertly drugged by McMasters and Kelly. Trump has been given a drug that will bring on a massive heart attact and the drug cannot be picked up in an ortopsy. He personal body guard has been forced out by McMasters and Kelly and they have now stopped even his family from seeing him. This has become extremely dangerous. McMasters and Kelly and Mattis are Soros Glogalists. Same thing happened to Kennedy and Nixon. It is about time patriots stand up or you will loose America.   URGENT 

Faeriedust's picture

Oh, is that why it's been nearly two weeks since he did something totally idiotic?  And we seem to have come to a conclusion to the North Korea bullshit?  If drugs is what it takes to stop WWIII, let's ALL have a few of those marbles.

HomelessPatriot's picture

And I was hoping that the stupity of so many other forums wouldn't creep into here.

baldknobber's picture

Trump has been given a drug that will bring on a massive heart attact and the drug cannot be picked up in an ortopsy. Same thing happened to Kennedy


I am pretty sure it was Kennedy's head that exploded not his heart

ThorAss's picture

You had me at ortopsy but I stayed for Glogalists.

Jack4952's picture

GrubHub will make Raef Lawson a HUGE SETTLEMENT - many millions of dollars in a "no-diclosure" contract. Lawson will accept; the case will be dismissed; and the GrubHubs, Ubers, etc. will continue to cheat their employees.

silverer's picture

Actually, the cheapskates will only pay what they have to. If he agrees to it, it's settled law. If they were to punch out a big ticket, all the other Raef folks of the US will come forward for their handout.

Byrond's picture

Time for gas prices to double. No more Uber. North Korea, hello? You can do it.


Last of the Middle Class's picture

Nothing more than the continued unloading of every and all employee costs onto the government or anyone else but the employer. Started with retirement/pensions, moved to confidence in a 40 hour week of work, continued with health care and the wonderful "Obamacare" we now suffer under and now the ultra elite get to call all employees contract workers. Don't try this at home folks, you're not massively connected to the government and don't have the billions in VC capital like these techie pervs do to avoid any and all laws.

silverer's picture

Raef Lawson sounds Nordic. How did he get into the US?

overmedicatedundersexed's picture

"Universal basic income"..someone here has written  as an answer..

well one small tiny little flaw..a culture of having children then having more..all covered by that sorta like welfare moms, which has worked really well in the inner city like chicago, baltimore...

let's incentivise explosive population growth of the most non productive ..sounds like a progessive's wet dream

brazilian's picture

Silicon Valley's future = Rust Belt 2.0!

Blue Dog's picture

If you deliver Pizzas for Pizza Hut you're an employee. If you deliver food for Grub Hub you should be an employee.

Everyone is lying's picture

This is being held in a California court.


So any legal ramification for America is meaningless.


Might as well be in a Moscow court.