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Instacart Is The Latest Gig Economy Startup To Get Sued For Employment Practices

A recent lawsuit takes issue with the way Instacart pays its workers.

Instacart Is The Latest Gig Economy Startup To Get Sued For Employment Practices
[Photo: Flickr user r. nial bradshaw]

The gig economy just can’t catch a break. As this young sector of the tech industry continues to blossom, so too do the legal questions and challenges that surround this new form of capitalism. The latest company to land under a legal microscope is Instacart–and it certainly won’t be the last.

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A class action lawsuit filed recently in California takes aim at Instacart’s classification of its workers, who it alleges are being denied advantages of traditional employment like overtime pay, reimbursements for fuel, and worker’s compensation.

If it feels like you’ve seen this movie before but can’t quite place it, it’s because it’s been on repeat lately, just with a different cast of characters. It’s merely the latest lawsuit to challenge these companies’ practice of doling out tasks like delivering groceries to an army of independent contractors instead of hiring employees. Similar lawsuits are pending against Uber, Lyft, and Handy, a company that specializes in on-demand home cleaning and repairs.

Instacart’s workers are tasked with buying and delivering groceries to customers. But in the event that a worker is injured or wants to be compensated for gas money, like an actual employee would, they’re out of luck–a fact that this new litigation claims is in violation of labor laws.

Explains Time:

“Instacart does all it can to distance itself from the employer-employee relationship,” says Bob Arns, whose San Francisco-based Arns Law Firm brought the suit on behalf of workers including Dominic Cobarruviaz, who was injured in an accident while delivering groceries for Instacart. “Why does a company want to do that? It’s to keep the bottom line lower, to unfairly compete against other companies. That’s the crux of our case.”

The suit contends that Instacart, which is two-and-a-half years old and operates in 15 markets around the U.S., has violated labor laws due to the workers’ “misclassification, unpaid workers’ compensation insurance, unpaid tax contributions, unreimbursed expenses, and related misconduct.” The complaint also claims that the company has committed fraud, knowing workers should be classified as employees, and used unfair business practices.

On the ride-sharing front, the tension surrounding the quasi-employment status of workers has and even resulted in multi-city protests. Those efforts, combined with more formal legal challenges, are challenging the very heart of the gig economy–and don’t expect them to let up anytime soon. Lawsuits against Uber, Lyft, Handy, and now Instacart may wind up weaving their way through the courts for some time–and if that list of gig economy defendants seems short now, just give it another month or two.

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About the author

John Paul Titlow is a writer at Fast Company focused on music and technology, among other things. Find me here: Twitter: @johnpaul Instagram: @feralcatcolonist

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