Some contractors working for Instacart are on strike in protest of sub-minimum wage pay and allegations of minimum wage violations.
The gig economy app known as Instacart allows drivers and shoppers to deliver supplies and groceries directly from retail stores to consumers. Contractors who provide this service to Instacart’s customers are a crucial part of the very structure of Instacart, but those contractors are now concerned that changes to the tipping policy in the company constitute minimum wage violations.
Minimum Wage Violations Allegedly Due to Lack of Default Tipping
The rise of gig applications and contract work has raised legal questions about minimum wage and work conditions. When an employment situation violates existing minimum wage laws, workers may come together to strike or take legal action. The claims from workers in this particular strike allege abusive working conditions for anyone who takes on gigs from the company.
A two-day strike was initiated by Instacart delivery drivers recently in protest of what those workers claim are abusive working conditions. The workers also claim that pay rates that violate existing laws on minimum wage. The minimum wage violations are lodged against Instacart, a company valued at $3.4 billion.
Instacart Changes Structure of Payments to Contractor and Generates Complaints
Hundreds of thousands of workers in 154 different markets currently work for Instacart. Thousands of people have already joined an employee group on Facebook to support efforts to change the company’s compensation structure. Independent contractors are the vast majority of the workforce at Instacart.
Instacart pays out those contractors on an algorithm-based commission. The algorithm is one of three factors the company uses to determine what a contractor’s pay will be for each job. In the past, successful Instacart contractors report that they were able to make a solid part-time or full-time income thanks to the tips provided by the company. The change in the structure of pay, from a default tip to service fee, now puts them at a disadvantage. The workers also claim that the new policy allows Instacart to keep most of the funds for each transaction. This commission could be as low as $1 in rural areas or as high as $14 in New York, according to the workers.
A per item fee usually equates to approximately $.40 in addition to tips and service fees. The default tipping option was recently eliminated by Instacart and this is the crux of the contractor claims of minimum wage violations. Consumers are now charged a default 10% service fee and not all of that service fee goes to the contractors. The per item fee charged to consumers doesn’t stack for multiples of the same item, meaning that a contractor who delivers ten cases of soda would be paid the same as delivering one. The minimum wage violations may develop into a legal claim.
If you or someone you know is aware of minimum wage violations that are affecting your work, you need to consult with an experienced attorney at Bradley/Grombacher as soon as possible to protect your interests- schedule your call today to learn more.