Instacart changes its “tips stealing” policy after facing workers backlash

4 min read

InstaCart, a popular online grocery delivery service in the US, has been hit with a lawsuit, filed by Los Angeles-based worker Sarah Lozano and other Instacart shoppers (workers who handpick items for customers and deliver them), last week. The lawsuit has been filed over concerns related to Instacart’s mishandling of tips and treatment of its delivery drivers.

Instacart also shifted to a new payment model last year in November, publicly announcing that the change is intended to provide clearer and more consistent earnings, and enhance the shopper experience”. The change was not taken well by the workers’ who complained of pay cuts and “tips stealing” after the company adopted the new pay model.

As per the new model, Instacart guarantees its workers a minimum per-job payment of $10, so during cases when the total pay of workers’ hit below $10, Instacart has to pay extra to make the overall pay reach $10 minimum, reports NBC News. However, as per the workers’ complaints, the tip paid by the customers’ is being used by Instacart to supplement the batch payments to reach the total $10 payment value for workers. After the $10 minimum payment is reached, the tip amount helps boost the worker’s take-home pay.

The lawsuit filed in California’s Superior Court, states that 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”.

This is not the first time when Instacart has come under the bus regarding payment related issues. In November 2017, Instacart paid $4.6 million to settle a class action lawsuit with its workers. The lawsuit was filed by independent contractors working for the firm who claimed 18 violations against it, including unfair tip pooling.

A workers’ organization, called Washington Workers’, shared screenshots on its blog that it received by Instacart shoppers across the country, stating that the screenshots are proofs of how “messed up” the company’s pay model is.


                                              Working Washington                                                       

The first screenshot (left) above shows Instacart paying just $1.23 for a job that took 62 minutes, and using customer’s tip to hit the minimum $10. If the customer had tipped $0, Instacart would have had to pay more. This reduces the company’s cost without adding anything to the worker’s income.  Similarly, the second screenshot (right) shows a job that took 127 minutes to complete, where Instacart paid just $6.72 as customer tipped $25. Many workers also took to Reddit and other online forums to raise their voice against Instacart’s paying practices.

Apoorva Mehta, Founder & CEO of Instacart, published a post on Medium, today, where she states that although the changed pay model was designed to improve transparency, the company fell short on delivering its promises to the workers. Instacart is now reversing its pay model and has launched new measures to “more fairly and competitively compensate” their shoppers. As per the new pay model, tips will always be separate from Instacart’s contribution to shopper compensation, and Instacart will “retroactively compensate” shoppers in case there are tips included in minimum, among other new changes.“While our intention was to increase the guaranteed payment for small orders, we understand that the inclusion of tips was misguided”, states Mehta.

Other than Instacart, another popular online grocery delivery services in the US, called DoorDash has come under the fire for similar reasons as Instacart. Although, DoorDash FAQ page states, “Dashers always receive 100% of tips…In addition to 100% of the tip, Dashers will always receive at least $1 from DoorDash”, DoorDash hasn’t explicitly reacted yet to the recent uproar.

Tech Workers Coalition (TWC), a non-profit coalition of tech-workers, also spoke out in support of the Instacart workers on Twitter, while bashing DoorDash for remaining silent:

Public reaction to the news has been largely negative towards Instacart, with people supporting Instacart shoppers for raising their voice against the firm’s unfair pay model:

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