Instacart Workers Say They Were Illegally Misclassified As Independent Contractors

To say that things have been contentious between Instacart and its hired shoppers and drivers would be a bit of an understatement, following backlash the company received when overhauling — and then again revamping — the way it handles tips. Last week, workers took things to another level, suing the grocery delivery startup claiming it broke state and federal labor laws. 

The lawsuit [PDF], filed Thursday in the Northern District Court of California, alleges that Instacart improperly classified shoppers as independent contractors to avoid paying overtime, reimbursements for work-related expenses, a regular wage at or above minimum wage, and other work-related benefits such as workers’ compensation insurance and payment of state and federal taxes.

Instacart, like many other companies in the sharing economy, hires workers as independent contractors. Customers use Instacart to place orders for groceries at hundreds of different retailers, these orders are fulfilled and then delivered by the shoppers.

“Instacart voluntarily and knowingly misclassified Plaintiffs and other Instacart shoppers as independent contractors for the purpose of avoiding the significant responsibilities associated with the employer/employee relationship,” the suit states.

However, 12 Instacart workers in 11 states claim in the lawsuit that this independent contractor classification is not accurate, as they are effectively treated like employees of the company.

These plaintiff workers say that, like wage-earning employees, they must make themselves “available to perform work within a predetermined range of time each day” but that they are not properly compensated for those hours because of their contractor classification.

In order to work for Instacart, shoppers are required to use their own vehicles, pay for gas, maintenance, and other driving expenses. Additionally, the company — which is based around a smartphone app — requires workers to use their own phones and data from their personal cellular plans in order to receive and carry out their work orders.

To add insult to injury, the suit claims, Instacart even charges shoppers $0.25 per order they fulfill for “their use of the ‘proprietary ‘Instacart Shoppers’ app.’”

As for the issue of wages, the lawsuit alleges that Instacart advertised it would pay workers “up to $25/hour” despite having no information that workers would earn those funds consistently. Instead, shoppers regularly earned below minimum wage.

The plaintiffs also take aim at Instacart’s recent tip changes. Back in September, the company announced it would ditch tips altogether in favor of a “service amount” that would be split between all workers.

While the company reversed course a month later, keeping both the traditional tip option and new service amount, shoppers said the change had dramatically lowered their take-home wages and confused customers.

The suit claims that Instacart’s service amount redistribution to shoppers who don’t “customarily and regularly receive tips constitutes an illegal tip pool in violation of the Fair Labor Standards Act (FLSA) by causing shoppers’ hourly wages to fall below the federal minimum wage.”

Additionally, the suit claims that Instacart willfully violated the FLSA by failing to pay workers — who regularly worked more than 40 hours a week — earned overtime.

“Indeed, it was Instacart’s practice to deny that overtime wages were due to be paid to Plaintiffs for work in excess of 40 hours per week,” the suit states.

While the complaint notes that a portion of Instacart’s workforce was reclassified as employees in 2015, that only applied to those who worked exclusively inside grocery stores.

Because of this, the suit claims that Instacart “knew and/or recklessly disregarded that it was misclassifying its other Shoppers from the outset.”

Still, ArsTechnica points out that the June 2015 change capped employees at 30 hours of work per week, again allowing the company to avoid paying overtime and providing benefits such as insurance.

This is not the first worker lawsuit against Instacart for misclassification of employees, Ars reports. In 2015, shoppers filed a similar lawsuit that was eventually ordered to arbitration.