The Ten-Year War Over a Job Title

On September 23, 2015, a California delivery driver named Andrew Tan filed a lawsuit in San Francisco Superior Court alleging that Grubhub misclassified him and thousands of other drivers as independent contractors. The claim was straightforward: if you control when, where, and how someone works, they are your employee. Grubhub disagreed. Ten years, two trials, one appeal, and three seismic changes to California labor law later, the company has agreed to pay $24.75 million to make the case go away.

The settlement, filed January 15, 2026, in the United States District Court for the Northern District of California, does not require Grubhub to admit wrongdoing. It does not require Grubhub to reclassify a single driver. It does not prevent Grubhub from continuing to call drivers independent contractors. What it does is release the company from every claim that could have been brought under California wage and hour law for a decade of alleged violations.

The court file is 65 pages of legalese, arbitration waivers, and release clauses. It is also a blueprint for how a gig economy company can fight classification for years, lose key rulings, and still engineer a settlement that protects its business model. This is not a story about justice. This is a story about attrition.

How the Case Survived a Decade

The lawsuit began as a simple misclassification claim. Grubhub removed it to federal court in November 2015. On July 19, 2016, the district court denied class certification. Most cases die there. This one didn’t. Plaintiff Raef Lawson joined the case, and the legal team pivoted to a two-phase trial strategy: prove Lawson was misclassified first, then use that ruling as a wedge to certify a class.

On February 8, 2018, Grubhub won. The court ruled that Lawson was properly classified as an independent contractor under the Borello test, California’s common-law standard at the time. Lawson appealed. While the case was on appeal, the California Supreme Court issued the Dynamex decision in April 2018, which replaced Borello with the ABC test for wage order claims. The ABC test is much harder for companies to pass. Under ABC, a worker is presumed to be an employee unless the company can prove: (A) the worker is free from control, (B) the work is outside the company’s usual business, and (C) the worker has an independent trade or business. Grubhub could not prove B. Delivering food is Grubhub’s entire business.

The Ninth Circuit vacated the trial court’s ruling in September 2021 and remanded the case for reconsideration under the new legal standard. On March 30, 2023, the district court ruled that Lawson was entitled to judgment on his minimum wage claim under the ABC test. The damages: $65.11 for nine days of work. Grubhub still won on the expense reimbursement and overtime claims. But the minimum wage ruling was enough. It made Lawson an “aggrieved employee” under California’s Private Attorneys General Act (PAGA), which allows workers to sue on behalf of the state for Labor Code violations. That single $65.11 judgment opened the door to penalties for every driver in California.

Then came Proposition 22. On November 3, 2020, California voters approved a ballot measure exempting app-based drivers from AB5, the law that extended the ABC test to the entire Labor Code. Prop 22 was funded by $200 million from Uber, Lyft, DoorDash, and other gig companies. It passed with 58% of the vote. The court later ruled that Prop 22 barred Lawson’s PAGA claims for any violations occurring after December 16, 2020. The case narrowed again. The remaining claims covered December 3, 2014, through December 16, 2020.

By the time settlement talks began in 2024, the case had been to trial twice, appealed once, and subjected to five separate mediations over seven years. Grubhub had survived class certification challenges, defeated most of the substantive claims, and narrowed the liability window to six years. The company was willing to settle. But it was not willing to admit liability. And it was not willing to reclassify drivers.

The Non-Financial Ledger

The settlement agreement refers to drivers as “Delivery Partners” 127 times. It refers to them as “employees” zero times. This is not an accident. The entire structure of the deal is designed to preserve Grubhub’s classification system while paying enough money to end the litigation. The drivers get checks. Grubhub gets to keep calling them contractors.

Raef Lawson worked for Grubhub for less than a year. He delivered food in the Bay Area. He won $65.11 at trial. He will receive a service award of up to $100,000 under the settlement. Rejenna Marshall, who joined the case later to capture post-Prop 22 claims, will receive up to $5,000. The service awards are compensation for being named plaintiffs. They are also an incentive to sign a release that forecloses any future challenge to Grubhub’s business model.

The settlement class includes “any and all individuals who entered into an agreement with Grubhub to use the Grubhub platform as an independent contractor to offer delivery services to customers and who used the Grubhub platform as an independent contractor service provider to accept or complete at least one delivery in California during the Settlement Period.” The settlement period runs from December 3, 2014, through the preliminary approval date in 2026. That is more than a decade. Grubhub’s records show tens of thousands of drivers worked during that window.

Settlement class members who submit claims will receive payments based on “Estimated Miles” traversed while delivering, as recorded in Grubhub’s system. The minimum payment is $25. There is no maximum. The settlement administrator, Simpluris, will calculate payments using straight-line distance from pickup to delivery. If a driver disputes their mileage, they must provide tax records or trip histories from the Grubhub app. Grubhub’s records are presumed correct.

Drivers who do nothing will receive nothing. But they will still be bound by the settlement. Their claims will be released. They will be barred from suing Grubhub over misclassification for the entire settlement period. The only way to escape the release is to opt out by mailing or emailing a signed exclusion request within 60 days of the notice. If more than 250 drivers opt out, Grubhub can walk away from the entire deal.

There is no appeal process. There is no trial. There is no admission of wrongdoing. There is only a claims process, a release, and a check.

Legal Receipts

Grubhub denies the allegations in the Action; maintains that each Delivery Partner’s claims must be individually arbitrated pursuant to any arbitration agreement to which that Delivery Partner may be bound; denies that it has engaged in any wrongdoing; denies that any Settlement Class Member was ever an employee of Grubhub; denies that Plaintiffs’ allegations state valid claims; denies that Plaintiffs’ claims could properly be maintained as a collective, class, or representative action.

Section 1.16, Amended Class Action Settlement Agreement, Lawson v. Grubhub Holdings Inc., Case No. 3:15-cv-05128-JSC

The Parties further agree that the Agreement, the fact of this Settlement, any of the terms of this Agreement, and any documents filed in connection with the Settlement shall not constitute, or be offered, received, claimed, construed, or deemed as, an admission, finding, or evidence of: (i) any wrongdoing by any Released Parties; (ii) any violation of any statute, law, or regulation by Released Parties.

Section 1.21, Amended Class Action Settlement Agreement

For settlement purposes only, Grubhub will stipulate to the certification of class claims that are subject to the certification requirements of Federal Rule of Civil Procedure 23, on the express conditions that Grubhub does so exclusively for settlement purposes and does not waive its right to compel arbitration or oppose class certification for any other purpose. If this Settlement Agreement is not preliminarily or finally approved, this paragraph, the Settlement Agreement, and any class certified pursuant to the Settlement Agreement are all void ab initio.

Section 3.2, Amended Class Action Settlement Agreement

Any Settlement Class Member who submits a timely and valid Claim Form, or does not submit a timely and valid opt-out request, agrees to waive the Class Action Waiver in any existing arbitration agreement between the Settlement Class Member and Grubhub with respect to the Released Claims.

Section 7.11, Amended Class Action Settlement Agreement

Societal Impact Mapping

Economic Inequality

The settlement allocates up to $8.25 million (33.3%) for attorneys’ fees. That is more than some drivers will collectively receive. Shannon Liss-Riordan and Todd M. Friedman, the lead attorneys, spent ten years on this case. They took it to trial twice. They survived an appeal. They navigated three changes in state law. The fee request is standard for class action work. It is also a reminder that the incentive structure of mass litigation often rewards lawyers more than plaintiffs.

The $2 million PAGA payment is split 75/25 between the state and the class. The California Labor and Workforce Development Agency will receive $1.5 million. Settlement class members will split $500,000. PAGA was designed to deputize workers to enforce labor law when the state lacks resources. In practice, it funds the state’s budget while delivering modest per-person recoveries.

Grubhub reported $2.4 billion in revenue in 2023. The $24.75 million settlement represents roughly 1% of one year’s revenue. It is not a punitive amount. It is the cost of closing a decade-old liability.

Public Health

Independent contractors do not receive health insurance, paid sick leave, or workers’ compensation. If a Grubhub driver is injured on the job, they bear the cost. If they contract COVID-19 while delivering food during a pandemic, they have no paid time off. The settlement does not address these issues. It compensates drivers for alleged wage violations between 2014 and 2020. It does nothing for drivers working today.

Environmental Degradation

Delivery drivers use personal vehicles for work. They pay for gas, maintenance, and insurance. The settlement includes $260,000 for administration costs. It includes nothing for vehicle wear or environmental impact. The carbon footprint of on-demand delivery is externalized to drivers and the public. Grubhub’s business model depends on it.

What Now?

The settlement must be approved by Judge Jacqueline Scott Corley of the Northern District of California. Preliminary approval is expected in early 2026. If approved, class members will receive notice by email and mail. They will have 60 days to submit a claim, object to the settlement, or opt out. The final approval hearing will follow.

Drivers who want to participate must submit a signed claim form. The form includes a release of all claims under the Fair Labor Standards Act and California labor law. It waives the right to arbitrate individual claims. It is an all-or-nothing proposition.

Grubhub’s CEO, Howard Migdal, and the company’s board are not named as individually liable in the settlement. The release applies to “past, present, and future shareholders, officers, directors, members, investors, agents, employees, agents, consultants, representatives, fiduciaries, insurers, attorneys, legal representatives, predecessors, successors, and assigns.” That is everyone.

For drivers seeking accountability, options are limited. The settlement forecloses class and representative claims. Individual arbitration remains possible for those who opted out, but arbitration is expensive and time-consuming. Organizing is the most viable path. California labor groups, including Legal Aid at Work (the cy pres beneficiary of unclaimed settlement funds), continue to advocate for reclassification of gig workers.

Watchlist

• California Labor and Workforce Development Agency (LWDA)
• California Division of Labor Standards Enforcement (DLSE)
• U.S. Department of Labor, Wage and Hour Division
• National Labor Relations Board (NLRB)

Resistance

Support local mutual aid networks that provide direct assistance to gig workers. Join or donate to worker organizing efforts such as Gig Workers Rising, Rideshare Drivers United, and We Drive Progress. Contact your state legislators and demand repeal of Proposition 22. If you use delivery apps, tip in cash whenever possible. The app takes a cut of digital tips. Cash goes directly to the driver.