Lawson v. Grubhub, Inc.

Background

Raef Lawson’s operative complaint alleged that the defendants improperly classified him as an independent contractor and therefore failed to reimburse business expenses, including vehicle and cellphone expenses. He brought the reimbursement claim under California Labor Code section 2802, which requires an employer to reimburse necessary expenditures or losses incurred because of the employee’s duties or the employer’s directions.

Lawson worked for the defendants in 2015 and 2016. The threshold issue for his reimbursement claim was whether he was properly classified as an independent contractor or should have been treated as an employee. The parties disputed which legal test governed that classification question.

The Competing Classification Tests

The ABC test generally governs employee classification for certain California wage-related claims. The earlier Borello standard applied before the California Supreme Court’s decision in Dynamex Operations West v. Superior Court, at least in the context described by the court. Dynamex addressed classification for claims arising directly from California wage orders but did not decide whether the ABC test applies to every claim under section 2802.

The Ninth Circuit had remanded the case so the district court could decide whether the ABC test applied to Lawson’s expense-reimbursement claim. The court treated the relevant portion of Lawson’s previously denied summary-judgment motion as a motion for partial summary judgment on that legal question.

Discussion

The court held that the Ninth Circuit’s decision in Bowerman v. Field Asset Services, Inc. resolved the issue. Bowerman explained that Dynamex did not replace Borello whenever California law requires classification of a worker. Instead, the ABC test applies to claims that derive directly from obligations imposed by a wage order.

Bowerman involved expense-reimbursement claims under section 2802 and held that the Borello standard applied because those claims were not based on, or rooted in, a wage order. The Ninth Circuit concluded that expenses such as insurance, cellphone charges, dump fees, and mileage or fuel were covered by section 2802 rather than by the wage order’s provision concerning tools and equipment.

The court found the same reasoning applicable to Lawson’s claim. His claim cited section 2802, not the wage order applicable to his industry. Although that wage order contained a provision requiring employers to provide and maintain tools or equipment required for a job, the court concluded that the provision was nearly identical to the one considered in Bowerman and did not cover the expenses underlying Lawson’s section 2802 claim.

The court acknowledged that Bowerman did not explain the basis for its conclusion about the listed expenses and that the court was unaware of authority specifically deciding whether the applicable wage order excluded vehicle-use and cellphone expenses. Nevertheless, the court stated that it was bound by Bowerman because no later California appellate or Supreme Court decision conflicted with it.

Ruling

Judge Jacqueline Scott Corley denied Lawson’s motion for partial summary judgment. The court ruled that the Borello standard applies to his section 2802 expense-reimbursement claim. The order also stated that a further case-management conference would be held on September 15, 2022, and that the order disposed of the defendants’ opposition docket entry.