Grocery delivery startup Instacart is giving many of its contractors the opportunity to become employees, the company says.
The company has split its shopper/delivery positions into two, and the shoppers will be able to become employees, while drivers will remain contractors.
The change has been underway for a while in Boston and is moving to Chicago as well as more of the 16 cities where Instacart operates, the company said.
This move comes on the heels of a well publicized ruling last week from the California Labor Commission that an Uber driver is entitled to more than $4,000 worth of expenses because she should have been compensated as an employee, and that she shouldn’t have been treated by the company as a contractor.
This area of employment is garnering increased scrutiny in several jurisdictions, and delivery companies and others that rely on heavy use of contractors would benefit from solid advice from attorneys well versed in labor law to ensure that their treatment of their contractors passes muster under the law.
Once a company has certain requirements or a certain level of training or supervision of its contractors, for example, they’re best treated as employees. That comes with added expenses of taxes and benefits, which Instacart says will ding its bottom line. The company expects 75% of its shopper contractors to opt in as employees.
“As Instacart grows, and we continue to learn what makes the best experience for our customers, we are constantly looking for ways to improve our service,” Instacart CEO Apoorva Mehta told TechCrunch. “When you look at the difficulty of shopping, picking and delivering items such as fruit or eggs that need to be carefully selected, you realize that grocery shopping can be complicated. For this reason, we want to provide supervision and training, which can only be done with employees.”