Instacart faces class-action lawsuit regarding wages and tips

Instacart is facing another class-action lawsuit pertaining to the way it pays its independent contractors, NBC News reports. Instacart guarantees its workers at least $10 per job, but workers are alleging Instacart offsets wages with tips from customers.

The suit alleges Instacart “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers. Based on this representation, Instacart knew customers would believe their tips were being given to shoppers in addition to wages, not to supplement wages entirely.”

Instacart has had a rocky relationship over the years with its drivers and shoppers. In 2016, Instacart removed the option to tip in favor of guaranteeing higher delivery commissions. About a month later, following pressure from shoppers, the company reintroduced tipping.

In 2017, Instacart settled a $4.6 million suit regarding claims that the company misclassified its personal shoppers as independent contractors, and also failed to reimburse them for work expenses. As part of the settlement, Instacart was required to change the way it described a service fee, which many people mistakenly thought meant tip. Then, last April, Instacart began suggesting a 5 percent default tip.

In addition to the lawsuit, workers have taken to Reddit and other online forums to speak out against Instacart’s paying practices. Since introducing a new payments structure in October, which includes things like payments per mile, quality bonuses and customer tips, workers have said the pay has gotten worse — far below minimum wage. In one case, Instacart paid a worker just 80 cents for over an hour of work. Instacart has since said it was a glitch — caused by the fact that the customer tipped $10 — and has introduced a new minimum payment for orders. So, Instacart paid the worker $10.80, but just 80 cents of it came from Instacart.

“In other words, Instacart is now confirming what workers have been saying since the change in pay structure: that the company is actually using customers’ tips to pay workers’ wages,” Working Washington, a workers’ organization that represents nearly 2,000 Instacart shoppers, wrote on its blog. “When a customer tips up-front, it doesn’t mean extra money for the worker. Instacart just pays the worker less to make up for it.”

While Instacart has said this was an edge case, Working Washington says this has happened in other cases. In another case, Instacart paid a worker just $7.26 (including cost of mileage) for over two hour’s worth of work.

“Obvious explanation: the customer tipped $25,” the organization writes.

It’s not totally clear how widespread this issue is, but it does not appear to be an anomaly, according to Working Washington.

“My sense is that the pay cuts are pretty much universal — workers pretty consistently reporting getting 25% or so less after the change,” Sage Wilson, an organizer at Working Washington, told TechCrunch. “The taking tips part they have admitted is policy for smaller jobs but we have seen good evidence that it extends further than that. We have a page with some collected screenshots here: https://www.workingwa.org/instacart/receipts.”

Next week, this group plans to hold a meeting for Instacart workers nationwide. Similarly, DoorDash is also under fire, with workers alleging DoorDash is paying drivers less, depending on how much they get tipped.

TechCrunch reached out to Instacart several hours ago and has yet to receive a response. We are also awaiting comment from DoorDash.