Instacart, the grocery delivery service for urbanites with money to spend, just did something very unusual for an on-demand startup: It reclassified many of its workers as part-time employees rather than independent contractors. The move, made days after the California Labor Commission ruled that one of Uber’s former contract drivers was really an employee, appears to be an attempt to stay one step ahead of regulatory pressure.
Founded in 2012, Instacart has more than 10,000 workers in 16 metropolitan areas across the United States. These shoppers work on behalf of Instacart, purchasing items at partner stores like Costco, Petco, and Whole Foods that customers select through an app. The Instacart shoppers then drop off the items at a customer’s home or office the same day. Los Angeles and San Francisco are two of Instacart’s largest markets.
The new part-time workers will work between 20 to 30 hours a week, earning more than the minimum wage (though pay will differ by city). Those who want to continue on as contract workers can only join the team of drivers that deliver groceries. As CEO Apoorva Mehta told Bloomberg, Instacart found that it could not adequately instruct contractors to shop for its customers:
“Grocery shopping is not easy. A Whole Foods location can have between 30,000 to 50,000 items, depending on the size of the store. It takes nuance and skill to pick the best items. What we found is that our shoppers require training and supervision, which is how you improve the quality of the picking. You can’t do that when they are independent contractors.”
Last year, Fast Company’s Sarah Kessler spent a month working as an on-demand contractor for companies like TaskRabbit. In a follow-up article published in February, Kessler noted that companies are increasingly facing lawsuits over their use of independent contractors. Switching to part-time employee classification means increased paperwork and government oversight, two things that protect workers but which on-demand services have traditionally avoided.