Some Instacart workers to strike over pay that can be as low as $1 per hour

Enlarge / Kaitlin Myers, a shopper for Instacart, studies her smartphone as she shops for a customer at Whole Foods in Denver. Myers received a grocery list for a shopper and then completed the shopping on Tuesday, October 28, 2014.
Denver Post Photo by Cyrus McCrimmon

raised over $674 million in venture capital, lets customers purchase groceries online (at a markup) so “shoppers” can purchase the items directly in-store and then deliver them. Like other so-called “gig economy” startups like Uber, Lyft, DoorDash, and more, Instacart relies heavily on part-time or contract labor.

The San Francisco startup has been sued multiple times in recent years over what some workers say are notably inadequate wages. Instacart has agreed to pay at least several million dollars to settle the lawsuits, which will result in a typical settlement payout of a few hundred dollars per worker. The attorneys who brought the lawsuits, by contrast, stand to make millions.

The company only has about 300 full-time employees (almost entirely based at corporate headquarters), but it has hundreds of thousands of part-time, in-store shoppers; independent contractor itinerant shoppers; and contractor delivery-only workers across 154 cities nationwide.

Ike has only been a shopper for a few months, but he’s frustrated by what he’s learned from his colleagues on a closed Facebook group, which serves as an online water cooler for over 5,300 Instacart shoppers. To help report this story, Ars was invited to join this Facebook group.

There, workers can gripe, compare notes, and organize. This group hopes that its strike, however small it may be, will help customers and the company understand their grievances over claimed inadequate tips and alleged low pay for particularly bulky and heavy orders. It is impossible to know precisely how many Instacart workers will actually stop working.

“Part of the reason why we do it is to help the shoppers stand up for themselves,” Ike explained while nursing his beer.

Instacart declined to speak to Ars on the record, but it said that it does know about the planned strike in Austin, Texas, and St. Louis, Missouri, and it did not expect any service interruptions.

Instacart provided Ars with the names and contact details of three shoppers who might have a different experience than those who plan to strike. Ars contacted them all by e-mail early Saturday morning. Of those, two responded.

One was Bradley Egan, a part-time employee and in-store shopper based in Houston, Texas.

“I was not even remotely aware of the strike going on this weekend,” he wrote, noting that he is paid $20 per hour.

“Instacart is a solid company that treats its employees fairly and offers the potential to make plenty of money for the work required. If employees are upset about small delivery fees or not receiving tips, then they should try working any other delivery job (such as a restaurant delivery driver) where there is usually no delivery charge, no compensation for gas, and long/late grueling hours to work.”

The commish

One of the strike’s leaders is Matthew Telles, a Chicago-based shopper who has been with Instacart for two years. He was also one of the named plaintiffs in a lawsuit (Camp et al v. Maplebear dba Instacart) that resulted in a $4.6 million preliminary settlement, which is set to be finalized in a Los Angeles court in January 2018. (Telles is set to receive $681 as part of the settlement.)

One Instacart shopper in Miami provided Ars with this recent screenshot.
Enlarge / One Instacart shopper in Miami provided Ars with this recent screenshot.

In a lengthy phone interview with Ars, Telles explained that “full-service shoppers” like himself who do the on-the-ground labor of shopping, texting with customers while in-store, paying, loading, and delivering groceries to customers, make their take-home pay in a combination of three streams of income.

The first, and the most important, is the “commission” pay per delivery, which is algorithmically calculated. Commission varies not only by region, but also day to day and week to week. Recently reported commissions are as high as $14 (New York City) or as low as just $1 (Evansville, Indiana).

When there are more full-service shoppers and delivery contractors available, the pay amount per worker goes down, and when there is higher demand for shopping, workers are encouraged to stay on the clock. There are also various bonuses (“bumps” in company parlance) and other incentives.

On top of that, shoppers make a per-item fee (typically $0.40)—however, this is not per unit of that item.

Ars spoke with six Instacart shoppers who said that they have routinely been made to pick up several heavy items, such as cases of bottled water, soda, or ice. Those items, of course, not only have to be loaded into a shopping cart, and then into a car, but they must be also hand-carried to someone’s door—sometimes up flights of stairs. Shoppers are still paid a $0.40 per-item fee even if someone orders one, five, or 10 cases of bottled water.

Photos posted on Twitter seem to bear this out.

There also appears to be an incentive for companies that order office snacks and beverages to simply do it through Instacart—where the fee is far lower than a commercial delivery service. However, most Instacart shoppers are driving small commuter cars, not large trucks with dollies and other equipment to help move bulky items.

“We are delivering these insanely fucking huge orders,” one Bay Area shopper, who spoke to Ars on the condition of anonymity, said. “We’re delivering to Apple, Facebook, these huge companies that are putting in massive orders—Costco doesn’t know how big these orders are. If we call [the support line], they tell us ‘Tough shit, you’re going to get deactivated—you have to do it.’”

Instacart, however, said that shoppers are free to refuse orders that they feel they can’t handle at no penalty, or to call a shopper support hotline to have more shoppers dispatched, or to make multiple trips for an increased commission.

The third stream of income is the service fee and tips, which workers stress are vastly different.

Pro tip

Until Fall 2016, the Instacart app gave customers a default option to tip, all of which went entirely to the shopper. Then, as the company began to rapidly expand nationwide and began to provide limited-time guaranteed earnings for debut shoppers in new cities, Instacart switched to a default “10 percent” service fee model. In other words, some of the service fee collected in Chicago might end up effectively subsidizing the pay of a new shopper in Detroit.

While tipping is still an option, frustrated shoppers like Telles say that customers often find it confusing as it requires multiple non-obvious steps. Plus, he wondered, why would most people tip if they’re already being charged a “service fee”—words that suggest an effective tip anyway.

“Before my tips were stolen I worked 38 to 40 hours a week and I made $1,200 a week,” Telles said. “I have now had to pare my hours down to the days where I make the most traffic, Sunday and Monday. I work 20 to 25 hours and I make about $300 or $250.”

Instacart said that customers have the option of paying the default service fee or removing it, in addition to tipping (or not), or any such combination. Some shoppers have taken to individually showing their customers how to remove the fee (“Do you want to know how to save 10 percent?”) and pay their shopper directly via tip instead.

“Workers needed to earn less in order for Instacart to grow,” the Bay Area Instacart shopper said. “The service fee is what totally fucked us all up.”

When the combination of commission, per-item fee, and service fee and/or tips are all put together, the result is that some Instacart shoppers say they are often making very low take-home pay. That amount is even lower when gas, car wear-and-tear, insurance, and other required expenses are factored in. (The Internal Revenue Service suggests that it costs $0.535 per mile to drive a car in 2017, including gas and vehicle maintenance.)

“I’ve never been at a company where the harder you work, the more they take away,” Sheena Layne, a shopper based in San Jose, CA, told Ars.

She said that when she began working in 2015, she could make about $1,000 for 30 hours of work. Now she has to work nearly double time, “driving and shopping faster.”

Layne estimated that in two years of work, she’s put an additional 100,000 miles on her car.

“I don’t know anybody who thinks it’s ok to pay somebody five dollars and ask them to deliver 40 cases of water,” she added.

Images of delivery take-home pay amounts posted to the Instacart shoppers’ Facebook group show recent instances where workers are sometimes making less than minimum wage for several hours of work. One woman showed $16.95 for seven hours of work in Jackson, Mississippi. Another said she was paid $13.30 for a three-hour job in St. Louis, Missouri. Yet another woman posted a screenshot for $2.80 after doing a two-hour pickup and delivery in Austin, Texas.

“Our theory is that most people, when you factor in cost, are making well below minimum wage,” Nate D’Anna told Ars. He’s the CEO of a new company called Dumpling, which aims to provide analytics and wage transparency to various gig economy services.

D’Anna himself recently tried being an Instacart shopper for three hours, during which he said he too delivered “cases of water” to Adobe headquarters in San Francisco and was forced to double park his car on a crowded street to make the delivery promptly.

An anonymous Las Vegas shopper recently told Dumpling that she was effectively ordered to load and deliver 600 pounds of sugar and cooking oil—and injured herself in the process. She said she wasn’t treated well by the company’s customer service system and was issued a “Reliability Incident”—Instacart’s equivalent of a penalty—which can ultimately result in being permanently booted from the service.

Avoiding a legal showdown

According to the $4.6 million settlement signed earlier this year, Instacart is still facing 50 ongoing arbitration proceedings, a private quasi-legal process that doesn’t allow for class-action lawsuits and generally favors corporations over individuals. Some of the other lawsuits have been ordered to private arbitration, under the terms of the employment agreement.

“The proposed settlement is still a pittance compared to what the case may have garnered if a class had been certified,” Veena Dubal, a labor law professor at the University of California, Hastings, in San Francisco, e-mailed Ars. “However, it’s hard to know whether it is ‘unfair’ because I’m unsure what they would have received in individual arbitration.  The numbers are certainly very low.”

Miriam Cherry, a labor law professor at Saint Louis University, told Ars that the fact that Instacart is still facing so many arbitration proceedings suggests that the legal pressure is not relenting—the workers’ lawyers may be trying to call Instacart’s bluff.

“You’re going to have to defend 50 of these,” she said. “Paying for an arbitrator is not cheap. And paying your lawyer to show up for all of these, that’s not cheap. At that point they’re saying they would rather go back to court.”

Plus, even after all of this litigation and arbitration, the underlying issue remains unresolved industry-wide: is it proper for these thousands of shoppers to be classified as contractors, rather than employees?

“There will be continued friction between the company and its workers if these issues are left festering instead of trying to solve them in a productive fashion,” Byron Goldstein, an Oakland-based attorney who has filed lawsuits on behalf of gig economy workers in the past, e-mailed Ars.

For its part, Instacart said that through its variable pricing, it’s targeting a nationwide average take home pay of around $14 per hour plus tips. The United States federal minimum wage is currently $7.25, but Massachusetts and Washington have a minimum wage of $11 per hour—California is $10.50 statewide, while some cities (including Oakland) are set to reach $15 by 2018. Instacart has not made any data showing how often it actually achieves that goal of an effective $14 hourly wage publicly available.

Roughly half of Instacart shoppers and delivery workers are independent contractors, rather than employees. Part-time employees, who stay in-store to “pick” items, have their hours capped at 29 hours, and Instacart does not pay their health care costs.

“I have always felt that this job is well worth it for the amount of money made based off of the work required,” Bradley Egan, the in-store Houston shopper and part-time employee who makes $20 per hour, e-mailed Ars. “I mean come on. I literally grocery shop for other people all day in an air-conditioned store and get paid more per hour than any other job I have had in the past (umpire, construction and landscaping, pizza delivery, teacher’s assistant, management positions).”

Still, at least as far as this weekend is concerned, Instacart isn’t worried that the looming strike will make any noticeable impact on its service. Plus, even if thousands of shoppers do end up striking, will anyone even notice? Or put another way, with the picket lines being entirely digital, the message may entirely be lost on most customers.

After all, at least in the San Francisco Bay Area, a message on D’Anna’s shopper app indicated that on November 19 and 20, in the run-up to Thanksgiving, Instacart doesn’t anticipate high volume shopping days anyway.

“How are people going to connect that they have a longer wait with the fact that a tip is missing?” Cherry said.

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