Wednesday saw three food delivery startups smacked with lawsuits. The nature of the suits against Caviar, DoorDash, and GrubHub lies squarely in the ongoing employee vs. independent contractor issue. With San Francisco as the legal battle ground, this classification of workers issue is one plaguing other bigger name startups.
The three companies—all focusing on a similar method of delivering from local restaurants and expanding the delivery menu beyond pizza and Chinese in many areas—are looking at two different legal situations. Both DoorDash and GrubHub are looking at class action suits, meaning a group of workers will be represented by a lawyer or legal team. Meanwhile Caviar is looking arbitration in another case.
The situations for all three companies illustrates how sturdy the case is for continuing to call those in their front row workforces “independent contractors”. In keeping workers under that label, startups avoid the maintenance and benefits for a company and while continuing to have a sizable pool of workers when expansion starts.
While certainly not the first incidents—that goes to other driver-oriented services like Uber and Lyft—a loss in either of these cases will have strong ripple effects will be felt by any startup that depends heavily on having a talent pool of “independent contractors.”