It’s been a tumultuous few weeks for grocery delivery service Instacart and its gig workers. A protest over how the company calculates compensation–by including tips–has prompted it to set new minimum payments twice in six days. What’s more, the company has also pledged to retroactively compensate drivers going back to November’s rollout of a controversial pay formula.
Last Friday, the company announced a $3 minimum, which did little to ease the concerns of its contract delivery workers, known as shoppers. Today, it announced a new minimum wage sliding scale–depending on details of the assignment–of $5 to $10. This is irrespective of the customer tip or bonus payments based on criteria like peak demand hours or 5-star ratings. Compensation for mileage, however, does count toward the minimum payment from Instacart.
This change could have mixed results for shoppers. Previously, Instacart had ensured a minimum payment of $10 per job, but that factored in the tip. That led to some recent embarrassing snafus, like a worker who was paid just 80 cents from Instacart due to a $10 tip. As Fast Company recently reported, there were many other instances of low pay due to tips. Drivers complained that those calculations left them sometimes earning 30% to 40% less than in the past.
But under the new minimum wage, shoppers could sometimes make less, if the tips are low. For example, if a shopper is paid the $5 minimum but the customer tips nothing, they would be making less than in the past, when Instacart guaranteed $10 and would make up the difference if its algorithmically calculated wage plus tip fell short.
However, it should benefit shoppers who were paid embarrassingly low wages–and a tip was all that made the assignment remotely worthwhile. (Instacart’s app defaults to a tip that equals 5% of the value of a grocery order, but customers are free—from the time they place the order to three days after delivery—to increase or decrease the tip to any amount, including zero.)
Instacart had long defended counting tips toward its minimum pay as in line with standard practice among gig-economy companies. Now the company says it has decided that “the standard is sub-standard.”
The sliding scale depends on the type of work the shopper does. Instacart, shoppers say, has increasingly been moving them to “delivery-only” assignments. Part-time Instacart employees (not contractors) working in popular stores shop for and package the order, and the “shopper” simply delivers it. For these assignments, shoppers may be paid as little as $5 under the new minimum wage.
For full-service gigs in which the shopper picks, packs, and delivers the goods, the minimum will range from $7 to $10, depending on the region, some of which have better compensation than others.
This is a developing story—stay tuned for updates.