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Instacart Pays $46M+ in Restitution to California Workers

Funds stem from 2019 lawsuit that alleged grocery delivery company improperly classified workers as independent contractors
Marian Zboraj, Progressive Grocer
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The $46.5 million settlement Instacart agreed to pay to workers in California is ready to be distributed.

The San Diego City Attorneys Office revealed last week that tens of millions of dollars owed to underpaid Instacart workers in California are now ready to be distributed. The funds come from a $46.5 million settlement of a lawsuit that the City Attorney’s Office filed against the giant grocery shopping app four years ago.

The suit alleged that the San Francisco-based grocery tech company misclassified its more than 300,000 delivery workers, which Instacart calls “shoppers,” as independent contractors over a period of five years, when they should have been considered employees. The San Diego City Attorney’s Office said that the alleged misclassification deprived workers of protections and compensation that they would have received as employees, such as overtime pay, paid breaks and reimbursement for expenses including gas mileage and cellphone data.

Instacart agreed to pay the settlement to resolve the claims, even though the company has denied any wrongdoing.

Since the settlement, the company has been listening to its workers and making some changes. In addition to making it easier for shoppers to get reimbursed, Instacart also introduced new features to help shoppers earn more on their terms, making it easier for them to decide how much they work, which batches they take and how far they drive. Instacart shoppers now have more flexibility to accept new orders before their current order has been delivered.

The company also recently updated its platform to strengthen the relationship between shoppers and customers. Previously, customers were given limited information about the person shopping for them, as well as their progress in the shopping journey. Instacart is now adding more transparency to the entire experience.

“Shoppers work diligently to deliver a great experience for their customers. We want to help showcase this effort and build products that foster a deeper sense of community and understanding between customers and shoppers,” said John Adams, VP of shopper and fulfillment product at San Francisco-based Instacart. “We recognize the care that shoppers put into shopping and delivering day in and day out, and are excited to introduce new features that shine a spotlight on that care and attention to detail for all customers to see.”

Meanwhile, a fund administrator, Simpluris, is sending notices for the $46 million restitution eligibility by email to the affected workers and managing the distribution of payments. Reimbursements to individual workers will vary, depending on the number of hours worked in California between Sept. 13, 2015, and Dec. 15, 2020 – the time period covered by the settlement.

Instacart partners with more than 1,100 national, regional and local retail banners to facilitate online shopping, delivery and pickup services from more than 80,000 stores across North America on the Instacart Marketplace. The company has approximately 600,000 shoppers picking, packing and delivering orders.

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