Instacart bags another class action lawsuit over shopper pay structure

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Instacart faces class action lawsuit over shopper pay structure

Grocery delivery service Instacart (recently valued at $7.6 billion) found itself in hot water last week following a report detailing a class-action lawsuit against the company.

Instacart maintains an army of independent contractors (shoppers) who make grocery delivery runs for customers who place orders. 

According to the lawsuit, Instacart has been underpaying shoppers on their base pay when they receive larger tips. In a widely publicized example, an Instacart shopper was paid a total of $10.80 for an hour’s work, despite receiving a $10 tip -- effectively earning 80 cents for the hour.

Instacart has since claimed that the $10.80 case was a glitch. Last Wednesday, the company announced that it was revising the tipping policy, as well as changing the base payment system.

Add another scandal to the cart

This isn’t the first time that Instacart has been caught in the crosshairs of unhappy shoppers.

In 2016, the company faced a boycott after removing tips from the platform (they have since been reinstated).

Instacart also settled a previous lawsuit for $4.6 million in 2017 related to how the company unfairly classified workers as independent contractors.

That checks out

Instacart is hardly the first company to be accused of unfair policies for its on-demand workforce.

The company is one of the many gig economy startups who prefer to pay workers as independent contractors (instead of employees) to avoid labor law requirements like minimum wage, overtime pay, and health benefits.

Uber, Lyft, Postmates, Homejoy, and Caviar have all faced class action lawsuits over wrongfully classifying workers as independent contractors.

Unfortunately, these suits have yet to result in meaningful changes to worker employment status. Most companies have been able to avoid a trial by jury and settle suits in private arbitration, where there are usually damages paid but no new legal rulings or precedents set.

The fight for the rights of on-demand service workers is far from over and future legal battles will have major implications in the prices and profitability these companies can deliver. Stay tuned.
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Brendan Uyeshiro
Brendan Uyeshiro