Lane Turner/Globe Staff
Owen Amsler, an Instacart shift captain, shops for a customer in the Whole Foods Market South End. The company is facing a claim from one of its workers who is seeking back wages and expenses.
Instacart, the fast-growing grocery company that offers online ordering and delivery from stores including Market Basket and Whole Foods, is being sued by a Boston woman who says she was shortchanged on pay and expenses while filling other people’s shopping bags.
The private arbitration case, which seeks to represent hundreds of workers in Massachusetts, says Instacart owes back wages and expenses for its shopping and delivery workers who were paid as independent contractors rather than actual employees.
Instacart, which recently started hiring some of its front-line workers to part-time jobs, declined to comment on the case. It was filed Tuesday by Donna Busick, who began working as a shopper and delivery driver for Instacart in late April. Busick, 57, said Instacart initially paid a minimum of $10 per hour for the work. But a few weeks into her work, Busick said, her minimum hourly wage disappeared and she was only paid based on the number of deliveries she made.
“You were pretty much left to your own devices, and what you made was what you made,” she said. On one day she worked at least six hours and only took home just over $20, before paying for her gas and other driving expenses.
Busick’s arbitration case is the latest front in an expanding national fight over the way tech companies use contract labor to provide delivery, transportation, and shipping services. The case was filed in arbitration because the company’s hiring paperwork stipulates any disputes be settled in arbitration, rather than in the courts.
Companies like Instacart, cited as examples of an emerging “on-demand economy,” have relied on smartphone-wielding laborers to provide their signature services. But they often don’t officially hire those workers, instead treating them as independent contractors who run their own businesses. That arrangement saves employers money because they aren’t required to pay contractors minimum wage, cover their sick days and job expenses, or submit payroll taxes to the state and federal governments. Shannon Liss-Riordan, who represents Busick and has filed similar lawsuits against several other companies, said companies appear to be using the same business model simply because it’s become popular.“They’re just jumping on board, thinking everyone’s doing it and they can get away with it,” she said. “But there are laws here. You can’t do that.”
There are signs, however, that tech companies are rethinking their use of contract workers. Instacart, which has raised about $275 million in private investment, recently said it was converting its grocery shoppers to part-time employees in the Boston and Chicago markets, with a possible expansion to other cities.Drivers, however, will remain independent contractors. There also are an unspecified number of workers in the Boston area who continue to both shop and deliver orders under the contractor arrangement. Busick says she’s one of them.
Shyp, a San Francisco-based startup that picks up and boxes packages that consumers want shipped, said Wednesday it would no longer use independent contractors for its workforce of couriers.
Charges that employers are misusing contract laborers aren’t exactly new. Liss-Riordan, the Boston-based labor lawyer who represents Busick, has won similar cases against strip clubs and janitorial companies. She also has sued several tech companies over their use of contract labor, including ride-for-hire service Uber, urban courier service Postmates, and home-cleaning startup Homejoy. She also filed an arbitration case against Shyp this week for its use of those contractors, although the company said it hadn’t received the legal paperwork in that case before announcing its decision to hire delivery couriers.
Not all of the cases are winners: Liss-Riordan lost a Massachusetts Supreme Judicial Court ruling earlier this year that held taxi drivers were properly being paid as independent contractors.The rise of contract-labor workforces is turning heads among established competitors, too.
Jeff Barry, the founder of produce-delivery company Boston Organics, has started noticing that his customers mention the quicker turnaround that Instacart offers — as little as one hour — compared to his company’s weekly delivery schedules.
“It’s fast and cheap,” said Barry, who said he offers workers a $14 hourly starting wage along with health care and other benefits. “It’s kind of hard to compete against a company that’s heavily funded, that can operate at a loss, and on top of that has found some seams in the labor laws to do their delivery a lot less expensively.”