The lawsuit alleges the San Francisco-based company misclassified employees as independent contractors in order to avoid paying overtime, providing unemployment insurance, scheduling paid rest breaks and following other labor laws.
The suit comes just three days after passage of Assembly Bill 5, legislation that will force an estimated 2 million California workers to become traditional hourly shift employees rather than remain independent contractors.
Asked about whether the lawsuit is the beginning of a general crackdown on gig economy firms, a spokesperson for the City Attorney’s office said the firm had been under scrutiny prior to AB 5’s passage.
“Not all gig economy firms are in violation of the law; however, Instacart is an $8 billion company that exerts a high degree of control over its shoppers,” said Hilary Nemchik, director of communications for the City Attorney’s office.
Instacart allows customers to order groceries online and have them delivered to their homes by a shopper who works as an independent contractor. Its business model is similar to that of Uber, Lyft and DoorDash.
“We are in compliance with the applicable laws and will vigorously defend ourselves,” the company said after the suit was filed. “We remain committed to working with the Governor, legislators, labor advocates, and the voters of California to advocate for a better solution for independent work that benefits all Californians.”
The City Attorney’s office is seeking restitution for allegedly lost wages and an injunction requiring Instacart to classify its shoppers as employees.
“Companies like Instacart cannot deprive their employees of the basic job protections guaranteed under state law by calling them independent contractors,” Elliott said. “We are seeking restitution for the workers who’ve been exploited in the past, and we are also demanding that Instacart start legally classifying its workers.”
Updated at 4:18 p.m., Friday, Sept. 13, 2019