Judge Says Instacart Misclassified its California Workers

In a landmark ruling, a San Diego judge said that the grocery delivery app Instacart has misclassified tens of thousands of its California gig workers who pack and deliver groceries as independent contractors.

While the ruling does not go into effect immediately and is currently limited to San Diego, the decision is a historic first step in enforcing the new California law AB5.

The controversial statute, which went into effect on January 1, was written to reclassify hundreds of thousands of gig workers in California as employees, making them eligible for basic labor rights and protections that tech platforms have conveniently circumvented for years, saving millions of dollars.

The case began when San Diego’s city attorney sued Maplebear, Instacart’s official corporate name, in September.

San Diego “makes a very plausible showing of improper classification,” the court said in its ruling, adding that Instacart can’t “legitimately claim surprise” that it might have to change its business model.

Internal emails obtained by Motherboard that Instacart sent to corporate employees during the case said a loss in San Diego “may affect our operations in California.” An email sent to corporate employees by Instacart’s general counsel Morgan Fong after the decision Monday night said that the company will immediately dispute the ruling.

Instacart “will immediately begin the appeals process” and the the judge “has for now limited the order to San Diego.”

“We expect to be back in court in the next 2-3 days to address this litigation,” Fong wrote.

“We disagree with the judge’s decision to grant a preliminary injunction against Instacart in San Diego,” an Instacart spokesperson told Motherboard. “We’re in compliance with the law and will continue to defend ourselves in this litigation.” The spokesperson said that it would appeal the decision in “an effort to protect shoppers, customers, and retail partners” and will take steps to ensure that Instacart’s service is not disrupted in San Diego during the appeals process.

As independent contractors, Instacart workers are excluded from basic labor rights granted to most workers in the United States. They do not receive overtime pay, worker’s compensation, social security benefits, and are not eligible to form unions or subject to minimum wage laws. To make matters worse, they do not receive compensation for the cost of gas, wear and tear on their cars, or other expenses incurred on the job.

“We’re thrilled about the ruling,” Sarah Clarke, an Instacart Shopper in Mountain View, California told Motherboard. Clarke was one of the lead organizers of a three-day nationwide strike in November, where thousands of Instacart workers disrupted the app, demanding changes to the company’s tipping policy. Instead, the company cut one of workers’ last pay perks, the ‘quality’ bonus, less than 48 hours later.

“Treating us independent contractors has just been an excuse for tech companies to get away with treating us poorly,” Clarke continued. “Basically, this is a huge step in the right direction.”

In recent months, Instacart, which has a workforce of 130,000 shoppers, has come under national scrutiny as its workers have launched a series of actions against the company. As the app has tinkered with its pay algorithm, some workers say they’ve seen their earnings drop precipitously over the past year, forcing them to seek help from churches and charities. Meanwhile, a disgruntled group of Instacart employees at a grocery store in a Chicago suburb voted to unionize earlier this month, a historic first at the company.

Beyond Instacart, the AB5 ruling could force other apps to reclassify their workers. (Lyft and Uber have led the tech backlash against the law.) And tech companies including Instacart, Uber, Lyft, Postmates, and Doordash have spent a collective $110 million on a 2020 ballot initiative that would exempt them from the law.

“Hundreds of thousands of gig workers in California are owed a lawful wage, social security and other basic workplace protections for the jobs they perform every day,” Lorena Gonzales, one of California’s most influential assembly members and the author of California’s AB5 bill, told Motherboard in response to news of ruling in San Diego. “It’s past time for these billion-dollar tech companies to do right by their workers.”