Following last month’s announcement that it would make some of its contractors part-time employees, grocery delivery service Instacart announced this morning that it’s now offering its contractor “personal shoppers” the option to apply for employee status in Atlanta, Miami and Washington, D.C. The company earlier offered employee positions to those located in Boston and Chicago, and noted at the time it would roll this out to other cities in the future, as well.
The decision only affects those who work as shoppers, not delivery drivers.
The company previously split its contractors’ job role into two – personal shoppers who prepare the items for deliveries inside the stores, and others who actually deliver the items to customers. Instacart founder and CEO Apoorva Mehta explained that this decision – and the decision to make its shoppers true employees – had a lot to do with the specialized skills and training required for the position. And that’s something that can only be done with employees, he said.
As employees, staff works between 20 and 30 hours per week, making above minimum wage, and qualify for traditional employee benefits like unemployment, Social Security, worker’s comp and more.
Of course, the decision to transition a significant part of its workforce comes at a time when there’s increasing debate about how companies operating in the on-demand space should classify their workers. Many, including car services Lyft and Uber, have leaned heavily on contractor labor to power their businesses, which some have argued could eventually be a vulnerability for these companies when legislation catches up with this change, and they’re required to provide employee protections which could cut into their bottom lines.
Additionally, the subject has also become a talking point for politicians including, most recently, Hillary Clinton who cited the sharing economy as an example of wage pressure. She said in a speech, that the gig economy is “raising hard questions about workplace protections and what a good job will look like in the future.” And she “vows to crack down on employers who misclassify workers as independent contractors”, which she referred to as “wage theft”.
If anything what this means is that businesses like Instacart are getting ahead curve by transitioning some portion of their contractors to employees now, and are taking the financial hit in the near term. However, Instacart, with $274+ million in investment according to CrunchBase, has plenty of funding to manage. But not everyone in the on-demand world agrees on how these businesses should operate. Uber, for example is fighting a class-action lawsuit in the district court of Northern California that would label all of its contractors as employees.
Instacart said earlier that, based on data collected during its Boston trial, it expects that over three-fourths of its in-store contractors will choose to become part-time employees. The company has over 7,000 shoppers working across 16 cities in the U.S.