Gig News: Instacart Converts Some Workers from Contractor to Employee Status

The Wall Street Journal reports that gig economy firm Instacart will convert some of its 7,000 workers presently categorized as independent contractors to part-time employees.  According to the Journal, “the move applies exclusively to workers who are embedded in grocery stores preparing orders for drivers who make deliveries.  Drivers and workers who both shop and drive will not be eligible, the company said.” More details follow:

Instacart said it has about 7,000 contractors who work exclusively in stores. The part-time employment program will apply only to workers in Boston and Chicago, after a trial in the former, with other cities to come later.

But the program will be limited in other ways too. It won’t help cover health insurance and will not accommodate full-time employment. And because Instacart will not offer part-time status to drivers, it will avoid costs such as vehicle insurance, depreciation and fuel.

A spokeswoman for Instacart declined to specify the pay for part-time employees. The company currently pays workers based on a formula that factors in how many deliveries they fulfill and hours they work.

In a statement, Instacart founder and CEO Apoorva Mehta suggested part-time employees are superior “shoppers” to contracted ones, presumably because they have stronger ties to the company.

According to The Boston Globe, Instacart is one of the gig economy firms defending a lawsuit over the categorization of workers as independent contractors, but the company claims the move is unrelated to that litigation.  Instead, Instacart says the change comes after a trial found the company’s workers in Boston did their jobs better after being given employee status.  The Chicago Tribune further notes that “the company plans to train shoppers with its own curriculum and incorporate training details from the stores it shops from” and that “the change will increase Instacart’s short-term costs but should help improve its long-term results.”

The change in classification at Instacart comes a week after the California Labor Commission ruled that an Uber driver was an employee and not an independent contractor.  The national debate over the status of gig economy workers has also lead some to argue for the creation of a new category of “dependent contractors,” which Professor Sachs discussed in a post yesterday.