Instacart and the San Diego city attorney’s office have settled charges that it misclassified its delivery drivers as contractors, a hot and ongoing issue in California and elsewhere that challenges the economics of delivery companies. last mile delivery using the generalized work model.
According to San Diego city attorney Mara W. Elliott, Instacart has agreed to pay $46.5 million to settle a lawsuit her office filed in 2019, covering 308,000 drivers who have worked for the delivery service company since September. from 2015 to December 2020. Each will receive a payment. based on the number of hours worked during that period.
Instacart has denied any wrongdoing, insisting that it correctly classified its workers at all times.
“We are pleased to obtain justice for these drivers who, at the height of COVID-19, provided an invaluable service to California households,” Elliott said in a statement. “My Office will continue our fight for workers’ rights across the state. We hope that other companies in the sharing economy also do the right thing for their workers.”
According to Elliot’s office, the settlement will reimburse Instacart workers for expenses such as maintenance and fuel costs for their personal vehicles, cell phone bills and PPE used for protection against COVID-19. Individual reinstatement payments can run into the thousands of dollars for the busiest drivers.
Last June, California’s controversial AB5 law went into effect, after the US Supreme Court refused to accept an appeals court case at the end of its session. The law, which requires temporary workers to be reclassified as employees entitled to benefits such as medical care and paid leave, was rejected by the California Trucking Association, which had filed an appeal. The CTA’s argument was that AB5 would place an undue burden on trucking companies, many of which are small or sole owner/operators, causing many to leave the state.
Legislatures in nine other Democratic-majority states have introduced legislation to apply the so-called ABC test to determine whether workers should be classified as contractors or employees. The Biden administration has introduced the PRO Act, a labor proposal that would make the test a national mandate.
Experts correctly predicted that AB5 would worsen supply chain challenges, including at busy West Coast ports, given worker shortages and other issues plaguing the logistics sector. Many companies suddenly found themselves without local, independent operators they had trusted.
The passage of the law prompted temporary work stoppages and a blockade of the terminal at the Port of Oakland, with thousands of truckers turning out to protest. Port operators are hoping for legal redress to avoid a detrimental recurrence during peak season, which is not a likely prospect.