Last month, San Franciso-based on-demand grocery delivery startup Instacart agreed to settle for $4.6 million class action lawsuits filed by workers who shop and deliver groceries to customers. These Instacart “shoppers” filed suits against the company in 2015 and 2016, alleging that the company misclassified them as independent contractors, and as a result denied them minimum wage, overtime, breaks, and reimbursement for work-related expenses required under federal and state laws. The shoppers also alleged that Instacart illegally withheld portions of their tips.
Instacart works like many other on-demand companies, like Uber and Lyft, by hiring workers as independent contractors. Instacart’s mobile app connects shoppers to customers, who order groceries to be delivered. Customers enter their shopping lists, then shoppers pull the items from grocery store shelves and deliver them to the customers. Instacart pays shoppers a flat fee per drop-off, as well as a commission per item, and shoppers may receive tips. Shoppers pay Instacart a $0.25 fee per order for use of the Instacart app.
The shoppers, however, alleged that they are treated as employees, and are therefore entitled to the protections employees receive under state and federal laws. Shoppers claimed that they were required to be available during a designated “shift” each workday, wear clothing bearing Instacart’s logos, maintain their vehicles in certain conditions, interact with customers in certain ways, notify Instacart of the times they began and completed work activities, and comply with a number of other specific requirements by Instacart, failure to comply with which could result in termination.
Instacart agreed to settle the shoppers’ claims for $4.6 million, which will cover shoppers who worked for Instacart in 17 states, including New York, New Jersey, and Pennsylvania. The more than 31,000 class members involved in the settlement will receive between $500 and $5,000 each. The company has also agreed to institute a new policy that shoppers may only be terminated for cause, to clarify the difference between a service fee and tip on its app, to allow shoppers to access detailed information on their work through the app, and to inform shoppers of insurance requirements before they undertake any work for the company.