Instacart Overhauls Worker Pay Post-Scrutiny

Instacart has announced changes to the way it pays its workers as it faces a class-action lawsuit over how it handles tips earned by its shoppers.

A class-action lawsuit was filed last week on behalf of Instacart shoppers, alleging that the on-demand delivery service “intentionally and maliciously misappropriates gratuities in order to pay plaintiff’s wages, even though Instacart maintained that 100 percent of customer tips went directly to shoppers.”

Last year, Instacart changed the way it pays workers in an effort to boost transparency. Before, drivers received a base rate and a fixed fee for each item ordered, with the delivery tip added on. Under the new format, Instacart created a batch payment based on the items the shopper is getting from the store and delivering to customers. Shoppers receive more if the item is heavier, and are also paid for the mileage driven. They also receive small bonuses when delivering at peak times.

On Wednesday (February 6), the company announced it was changing this new structure “to more fairly and competitively compensate all our shoppers,” according to a blog post. The changes will ensure that tips will always be separate from Instacart’s contribution to shoppers’ pay, and that all batches will have a higher guaranteed compensation floor for shoppers, with Instacart footing the bill.

In addition, the company plans to retroactively pay shoppers when tips were included in minimums. “Over the coming days, as we transition to the new higher minimum floor payments, we will make you whole on the transactions that have occurred since the launch of this feature. Specifically, we will proactively reach out to all shoppers who were adversely affected by instances in which Instacart’s payment was below the $10 threshold. For example, if a shopper was paid $6 by Instacart, to compensate for our mistake, he or she will receive an additional $4 from Instacart,” the company explained.