Originally launched in San Francisco and since expanded into many other cities, Instacart has fundamentally changed the traditional grocery delivery space by connecting customers with shoppers and drivers who shop for and deliver grocery orders providing their own transportation in as little as one hour.
On Monday, the company – which makes a Web and smartphone app for consumers to order groceries for delivery from stores such as Whole Foods and Costco – announced that a large portion of Instacart staff in Chicago and Boston have become part-time employees, working 20 to 30 hours per week and receiving benefits including unemployment, Social Security and Medicare. Until now, Instacart’s shoppers all worked as independent contractors. Instacart plans to roll out this option to more of its independent contractors in some of the other cities it serves in the coming months and will make permanent the changes that were already in place in Boston.
Apoorva Mehta, Instacart’s founder and CEO, told Bloomberg Business on Monday that the possibility of new regulatory issues wasn’t the reason for making the change. According to the nonprofit freelancers union, 53 million americans now work as freelance contractors-about one in three United States workers. “A lot of these companies were looking at companies like Uber and FedEx and saying, ‘If these big guys can do it, so can we.’ Well, that tag line has come back to haunt people over and over again”.
But some on-demand workers are finding the seeming freedom offered by their jobs comes at a cost. It suggests that other similar operations-companies like TaskRabbit or Handy, if not Uber or Lyft-could reach a similar conclusion. And if equipment gets damaged or contractors get hurt and can not work, they lose the chance to make money.
“It’s been our claim from the beginning that all the Instacart workers are employees of the company and should be treated that way”.
Those working for Instacart as drivers and those who do both the shopping and driving will remain contract workers. And Google Express delivers from stores ranging from grocers and drugstores to Barnes & Noble and Kohl’s to entice shoppers to use the service for more of their purchases.
The conversion from independent contractor to part-time employee is an important distinction.
All of which makes Instacart’s decision all the more intriguing.
Turns out, contract workers might not be the answer to the on-demand economy. Rather, it says, it want to improve customer experience. Benefits are another aspect often extended to employees but not independent contractors.
Jonathan Davis, a San Francisco lawyer who filed suit against Instacart, said the change amounted to “conceding an essential point in the case”.
Instacart’s decision also comes as the company is in the process of splitting its shopper and driver roles. Workers who do the in-store shopping – picking out the ice cream or toilet paper a customer has ordered – will receive training and have management oversight as part of the switch to employee status. Under the new system, shopper-only workers “embed” in certain stores to prepare the orders for drivers; for now, it’s only these shoppers who are getting the option to switch over to part-time employee status.
Chicago is only the second market for Instacart’s part-time shoppers. Instead, it put some of its Boston contractors on the payroll for several months as a test and found they did their jobs better, the company said.
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