August 11, 2020 – Backing Lower Court Ruling, 7th Circuit Says Grubhub Drivers Must Arbitrate Claims
The 7thCircuit Court of Appeals has unanimously upheld a lower court’s decision to resolve the proposed class action lawsuit detailed on this page through arbitration.
Though the plaintiffs countered Grubhub’s motion to compel arbitration by arguing drivers counted as “workers engaged in foreign or interstate commerce,” the panel of 7thCircuit judges wrote the plaintiffs “completely ignore the governing framework” of what it means to actually be a worker engaged in moving goods across interstate lines.
“Rather than focusing on whether they belong to a class of workers actively engaged in the movement of goods across interstate lines, the plaintiffs stress that they carry goods that have moved across state and even national lines,” the panel wrote. “A package of potato chips, for instance, may travel across several states before landing in a meal prepared by a local restaurant and delivered by a Grubhub driver; likewise, a piece of dessert chocolate may have traveled all the way from Switzerland.”
According to the panel, however, a worker must be “connected not simply to the goods, but to the act of moving those goods across state or national borders.” Essentially, it is a requirement for a worker to be “engagedin the channelsof foreign or interstate commerce,” the panel said, noting that the wide stroke with which the plaintiffs have painted affected workers could open the door a little too broadly.
“By erasing that requirement from the statute, the plaintiffs’ interpretation would sweep in numerous categories of workers whose occupations have nothing to do with interstate transport—for example, dry cleaners who deliver pressed shirts manufactured in Taiwan and ice cream truck drivers selling treats made with milk from an out-of-state dairy,” the 7thCircuit said.
Ultimately, the 7thCircuit ruled the plaintiffs were not “engaged in interstate commerce” and therefore did not qualify for an exemption underneath the Federal Arbitration Act.
GrubHub Holdings Inc. and GrubHub Inc. are staring down a proposed collective and class action over their alleged misclassification of delivery drivers as independent contractors. The lawsuit, filed in Illinois federal court, claims the misclassification of drivers is to blame for unpaid minimum and overtime wages owed under the Fair Labor Standards Act (FLSA) and Illinois Minimum Wage Law.
One plaintiff worked for GrubHub from July 2016 through March 2017, while the other continues to drive for the company, the lawsuit says. The plaintiffs argue GrubHub delivery drivers are actually employees under state law given that the company directs the workers in:
Where to report for shifts;
How to dress; and
Where to go to pick up or await deliveries.
According to the suit, GrubHub drivers typically work scheduled shifts and, while on the clock, are required to stay within assigned areas and remain available to accept delivery assignments. Moreover, the lawsuit says that drivers who do not follow GrubHub dispatchers’ instructions will lose out on job assignments or have their shifts canceled entirely, as well as risk outright termination. Further indicating an employer-employee relationship between GrubHub and its drivers, the lawsuit states:
“Drivers are required to accept job assignments during their shifts. If a driver’s job acceptance rate falls below what GrubHub deems acceptable, GrubHub may terminate the driver or not pay them a guaranteed hourly rate. Frequently drivers receive multiple job assignments at the same time and so cannot always accept all of them. However, in order to avoid being terminated, they must accept as many assignments as possible.”
Rather than hourly wages, GrubHub drivers are in most cases paid a flat fee for each completed delivery plus tips without reimbursement for fuel and vehicle/bicycle maintenance costs, the case states.
“Because drivers are paid by the delivery (though they sometimes receive an hourly rate of pay), and have been required to pay expenses necessary to do their job, their weekly pay rates have fallen below federal or state minimum wage in many weeks,” the plaintiffs allege.
The case points out that the two named plaintiffs previously opted into a related lawsuit—Souran v. GrubHub Holdings Inc. et al.—containing virtually identical allegations. Both plaintiffs withdrew their opt-ins and filed the lawsuit detailed on this page on behalf of numerous GrubHub drivers who tried to opt into the previous case yet missed the deadline to do so.