GrubHub Class Action Suit Could Have Implication for 1099 Status

A former GrubHub driver has filed suit against the company, alleging GrubHub misclassified the drivers as independent contractors rather than employees. The class-action lawsuit is the first of its kind in California and could have repercussions for the gig economy and hiring practices.

Those hired as 1099 workers are considered self-employed, able to set their own schedules and not necessarily eligible for overtime, benefits, and workman’s comp. They’re also responsible for paying taxes, while W-2 workers have their taxes deducted from their paychecks by the employing company.

The outcome of the suit could redefine gig economy workers as W-2 employees rather than 1099 freelancers. To determine if a job is W-2 or 1099 qualified, a test is applied that evaluates the amount of control a worker has over his work, evaluating things like how the work is part of the company’s core business, the skill required, how much work is done under manager supervision, and more.

This trial is currently ongoing and could have implications for contractor employment beyond the gig economy.

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