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‘We’re Confident There’s Fraud.’ Instacart Workers—Upset Over Dwindling Pay—Are Petitioning for a Dept. of Labor Audit

December 20, 2019, 7:05 PM UTC

Sarah Clarke still remembers the regulars. Working a full schedule as an Instacart shopper, a job she stopped doing regularly last year, she had plenty of customers who she periodically delivered groceries to. But there was one elderly couple, in particular, that she recalls most. One time she was unable to find the mangos they typically ordered. So during a trip for a different customer to a different store, Clarke grabbed some for them. And without any promise or expectation of compensation, the former Mountain View, Calif.-based product designer drove to the couple’s home and surprised them with the fruit.

“It’s what you do when you’re happy on the job,” Clarke says. “When we’re happy, the customers are happy.” 

But for many Instacart shoppers, gig workers who pick and deliver groceries for the online service’s customers, that happiness has since faded, Clarke says. Over the past few years, some shoppers, including Clarke, say their base pay has dwindled, tips have been misappropriated, and various bonuses have disappeared. What was once enjoyable, full-time work for some, has increasingly become a gig where shoppers have had to quickly snag the few well-priced jobs on the app—and they often aren’t enough to make ends meet, shoppers say. Meanwhile, they’re finding opportunities with other companies like Uber, DoorDash, and Amazon Flex who are looking for more gig workers to support their contractor-driven platforms.

Now, a group of Instacart contractors, led by a small, unofficial committee of a dozen activist workers from across the nation, is asking the U.S. Department of Labor to investigate how Instacart has handled shoppers’ tips. The group plans to file a petition with more than 500 shoppers’ signatures supporting the audit in upcoming weeks. Along with the request, the group also started another petition Friday that it plans to submit to the U.S. Occupational Safety and Health Administration seeking oversight. The two requests will follow a week’s worth of actions against the company by its workers that includes alerting federal and state legislators, educating the company’s retail partners like Costco, and encouraging shoppers to file wage claims in their respective states.

“We want an actual audit of Instacart to determine the level of fraud committed,” says Vanessa Bain, a Silicon Valley-based Instacart shopper who’s served on the activist committee for four years. “We’re confident there’s fraud.”

In an email to Fortune on Monday, Dec. 16., Instacart provided the following statement regarding shoppers’ concerns about their pay: “Our relationship with all shoppers is important and we take their feedback very seriously. We recognize we have more work to do, but we remain committed to listening to and applying that feedback to improve their experience.”

Instacart did not respond to Fortune’s requests for comments about the committee’s petitions.

Unrest ahead of an IPO

The shoppers’ backlash against Instacart comes as so-called gig economy companies, like Uber, Lyft, and DoorDash, face scrutiny over how much they pay their contractors, what benefits they provide to them, and whether those workers should be considered contractors versus employees. Recent legislation has raised the stakes. In September, California state lawmakers passed Assembly Bill 5 (AB5), which makes it harder for companies like Instacart to classify workers as contractors. The law will take effect Jan. 1. In December, New Jersey followed suit with similar legislation.

But the Instacart Labor Dept. complaint also comes as the company reportedly gears up for an initial public offering, which could be greatly impacted by worker unrest. Instacart was most recently valued at $7.87 billion in December 2018, according to PitchBook.

Instacart has denied the workers’ accusations, saying it has spent the last several years tweaking its business model to improve the experience for customers and shoppers alike.

For example, in 2018, the company rolled out a new pay system that allowed workers to review details—like how many items and units were included in an order, how far shoppers have to travel, and how much they’re getting compensated—before accepting the job. Instacart has also introduced various perks for shoppers like access to insurance plans, injury protection, and a loan assistance program to help them navigate paying off student debt.

The changes were all results of feedback the company received from its shoppers, Instacart says.

Instacart also says the stance of this group only represents a small portion of its more than 130,000 shoppers across the nation, and that the company has multiple channels for its workers to provide feedback. The company says it has previously met with this specific group of workers. But Bain said, while she has voiced these concerns at larger shopper meetings, no one from Instacart has met specifically with the coalition filing the petition.

Support for change

Part of the problem, according to Bain, is a new feature the company introduced called On-Demand. Instacart says it rolled out On-Demand to allow shoppers to jump on the app and work whenever they wanted, versus only having the option to take scheduled hours. 

But as a result, it’s much harder to score the higher-paying jobs, Bain says. San Diego-based Susan Cuffaro, who has worked for Instacart for 18 months, says she cherry-picks the jobs that make it worth the cost of making the trip.

“I’m not doing full days anymore because it’s a money-losing proposition,” Cuffaro says.

In 2016, Instacart set the default tip in the app to 10%, but changed the amount to zero later that year—meaning customers had to make a conscious effort to remember to tip—before adjusting it to 5% in 2018, when it also added a 5% service fee. Instacart says regardless of the set default, customers have always been able to change how much they tip. But shoppers say the change decreased tipping across the board, as customers rarely notice when Instacart makes small changes to things like tips, and therefore rarely go in to adjust it.

More recently, in February 2019, Instacart rolled back a controversial tipping policy which it debuted the previous November, that used tips to cover the overall payment shoppers received on a job, rather than as an additional bonus. The policy upset customers and shoppers, who felt like the company was stealing tips. Instacart says 100% of tips have always gone to the shoppers.

These changes, coupled with numerous other tweaks affecting shoppers’ pay, have caused some workers to feel defeated. Bain says she’s picked up work from other on-demand companies, including DoorDash, Caviar, and UberEats, to supplement the lower pay she now gets on Instacart, even though she’d rather just work for Instacart full-time like she once did.

And she is not alone in her frustration. “Everyone is losing their mind,” Clarke says about the Instacart shoppers she bumps into at grocery stores. “Morale is so low, and it just gets worse and worse. I’ve never seen such a toxic relationship between workers and the company they work for.”

The group of Instacart activists initially formed four years ago when they rallied against Instacart’s tipping changes. Since then, they’ve been communicating via a group chat and conference calls to discuss their jobs’ issues.

Bain says though their committee is small, their support isn’t. To date, it has staged four walkouts—in which workers would either stop using the Instacart app or disrupt the app’s workflow—to protest the company’s pay models. The first two, taking place in October 2016 and November 2017, attracted hundreds of shoppers. The third walkout, which took place over a span of three months beginning in November 2018, drew “thousands,” says Bain. An estimated 5,000 people participated in the latest protest last month, she adds.

“We’ve been asking Instacart to change our pay to be better,” she says. “They’ve only changed it to be worse.”

Cuffaro, who also serves on the committee, says she saw changes to her pay within the first few weeks of working for the company. “I could work approximately seven to eight hours a day and come up with $200 to $300, depending on the day,” she says. “Now, if you work the same hours, you’d come up with, if you’re lucky, $150.” 

‘Central to its operations’

Shoppers have had a couple victories against Instacart this year. In New York, for example, an Instacart shopper won her unemployment insurance case against the company, according to documents shared with Fortune. As a result, Instacart has to reclassify her as an employee and retroactively pay contributions on insurance. In the ruling, the state also said the company would have to similarly pay contributions for all “other persons similarly employed.”

But the ruling on this particular case does not mean Instacart has to reclassify all of its New York shoppers, according to Instacart. The company said the ruling was solely based on this specific worker’s circumstances and only as it relates to unemployment benefits.

Regardless, Robin Pape, another Instacart shopper in New York, still hopes the ruling will affect the wage claim she filed in September, but it’s unclear how long she’ll have to wait before she finds out.

“When I asked the claim investigator for a ballpark, she said there’s no way to tell with these kinds of things,” Pape says.

But Instacart is hardly alone in dealing with lawsuits claiming that the company has misclassified alleged employees as contractors. Uber, Lyft, and DoorDash are among the others that are constantly fighting—and sometimes winning—these battles. The lawsuits are likely going to increase when California and New Jersey’s bills take effect next year.

But Bain says Instacart is one, if not the only, on-demand company that will have particular trouble, given that it hires employees who are responsible for shopping for groceries, too. This makes it harder for the company to prove that contractors do work that’s outside the regular course of business, and therefore shouldn’t be paid as employees.

And though some shoppers are upset by the way Instacart has treated them, they still see a need for the service, which can provide assistance to people who are disabled or don’t have access to reliable transportation.

Pape, who is also on the committee, calls the service “wonderful” and “needed,” but also says a company that can’t pay a living wage has no business being in business.

“My hope is that Instacart will recognize it needs to come to the table and talk to its shoppers,” says Cuffaro. “It’s central to its operations.”

After publication, Bain refuted Instacart’s statement to Fortune, and clarifications have been made.

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