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On Thursday, 12 Instacart “shoppers” across 11 states filed a proposed federal class-action lawsuit against the San Francisco startup, alleging a breach of state and federal labor laws.
The Instacart lawsuit is one of several currently targeting so-called “sharing economy” startups, and they all get at the same question: can workers be accurately classified as independent contractors, or should they properly be designated as employees? In Instacart’s case, customers order groceries online, but those groceries are then picked up and delivered by the company’s shoppers.
So, should those shoppers be treated as employees?
Classifying such workers as employees rather than contractors would entitle them to a number of benefits under federal law.
This includes unemployment benefits, workers’ compensation, the right to unionize, and, most importantly, the right to seek reimbursement for mileage and tips.
This reclassification would also incur new and significant costs for Instacart and other affected companies, including Uber and Lyft.
An on-demand cleaning service, Homejoy, shut down last year just months after it was hit with a similar labor lawsuit.
The three labor law experts with whom Ars spoke agreed that this underlying sharing economy issue would not be resolved anytime soon.
It may, they said, have to be taken up by the Supreme Court at some point.
“Instacart—like Uber—seems to be clearly misclassifying their workers,” Veena Dubal, a law professor at the University of California, Hastings, told Ars by e-mail.
In the Uber case, thus far, no class action has effectively forced enforcement, despite any number of cases being filed in different state and federal courts and a strong case that Uber is an employer. Perhaps taking a lesson from the Uber litigation, this Instacart case takes a new approach: alleging misclassification across jurisdictions and across wage protection laws.
A drawback of this strategy is that each state law has to be addressed on its own terms.
This may—or may not—elongate and complicate the litigation.
In the new lawsuit, called Husting v. Maplebear dba Instacart, all of the plaintiffs allege that they did not receive reimbursement for work-related expenses, did not receive proper overtime pay, and “regularly” were not paid at or above minimum wage.
As the civil complaint states:
Plaintiffs were required to make themselves available to perform work within a predetermined range of time each day but were not compensated in a manner that guaranteed they were compensated at or above the applicable minimum wage during those hours.
During nonproductive time, or time during which Plaintiffs were required to make themselves available for work but were not given an assignment, Plaintiffs were not compensated in any manner whatsoever. On various occasions during the relevant period, Plaintiffs spent sometimes up to four hours of a designated shift sitting in their cars in a grocery store parking lot awaiting direction from Instacart. Plaintiffs were not compensated for this time in any manner.
The San Francisco-based lawyers that brought this case also filed a similar lawsuit (Cobarruviaz v. Maplebear dba Instacart) in 2015.
That suit remains technically pending, but was ordered to arbitration.
This new case, with new plaintiffs, takes into account an August 2016 decision by the 9th US Circuit Court of Appeals, which found that employees cannot be forced into binding arbitration, a private legal process that generally favors corporations and makes collective cases (class actions) all but impossible.
The main difference, of course, between the 9th Circuit’s ruling and this new case, Husting, is that Instacart will likely argue that the plaintiffs are not, in fact, employees.
Rebecca Silliman, an Instacart spokeswoman, e-mailed that the company would not “comment on anything pending.”
Holding feet to the fire?
In June 2015 Instacart took the unusual step of allowing its delivery staff, which until then was comprised entirely of contractors, the option to become part-time workers capped at 30 hours per week.
As Ars reported at the time, Instacart spokeswoman Andrea Saul specifically denied that the 30-hour cutoff was designed to avoid providing health care to shoppers and drivers under the Affordable Care Act (ACA), in which full-time employment is defined as “an employee who is employed on average at least 30 hours of service per week.” The ACA, among other things, requires that employers with more than 50 employees provide health care to their workers and their families.
Instacart’s own office-based full-time jobs boast “comprehensive health, dental, and vision coverage” and a “smorgasbord of food while you work, including lunch and dinner catered daily,” according to company listings.
In-store jobs (the overwhelming majority of the company’s workforce) only offer “$15/hr flat rate pay” and boast “flexible hours—no need to work the same schedule every week!”
Miriam Cherry, a labor law professor at Saint Louis University, said the following to Ars in an email:
The issue I have the most trouble with here is that Instacart did do a major PR blitz during the first lawsuit, saying that they were going to start moving the workers into employee positions. Now it looks like they didn’t do that, despite all the positive PR that they received from that announcement. Maybe the plaintiffs in this go-round are trying to hold them to some of their promises that they made in the press.