These Instacart Workers Want You to Leave Them a 22-Cent Tip

(Bloomberg) -- More than 100 of Instacart Inc. workers are calling on customers to support reforming the grocery delivery app’s payment practices -- by leaving them 22-cent tips.

The counterintuitive call for paltry gratuities is meant to seize attention, signal solidarity -- and circumvent what the workers say is a stingy new practice of paying workers less from the company’s coffers if they’re promised more in tips by customers.

“Instacart is changing around their pay structure arbitrarily and treating workers like test subjects,” workers wrote in a statement they plan to publish online Thursday as a Medium.com post and as a petition for co-workers to sign. About 150 workers had signed their full names onto a version viewed Wednesday by Bloomberg News. About another 30 signed with their first name and an initial, which organizers say was due to fear of retaliation.

The issue for the workers is Instacart’s overhaul last fall of how it pays its shoppers, who scurry around grocery store aisles loading up carts to deliver to customers who have placed orders online. The company rolled out a suite of changes it said were meant “to provide clearer and more consistent earnings.” In a blog post last year, Instacart said the changes made tipping easier, bonuses more plentiful, earnings more transparent, and high-demand times more lucrative.

“We value our 70,000 dedicated shoppers and appreciate all of their feedback,” the company said in an emailed statement. “As our business has grown over the last year to 15,000 stores in 4,000 cities, we’ve also been investing in our shopper experience with new tools and features to make shopper’s jobs easier. In 2019, we will continue listening and collaborating with the shopper community to create the best and most fulfilling opportunities for shoppers everywhere.”

That’s not how some shoppers see it. “The pay per job is now inexplicable –- and much lower,” said the workers launching the petition, adding they have seen “dramatic cuts in our paychecks,” with some now making a third less than before. They say they were better off with Instacart’s old guaranteed base rate for each delivery and additional incentive per item. Now, they say, “shoppers often reject jobs only to see the same jobs re-appear minutes later with slightly higher pay, indicating that Instacart is simply trying to sell the job to the lowest bidder with no other obvious standard for how a given job should be paid.”

Instacart said the new payment system was based on extensive input from workers, and has been welcomed as an improvement by the vast majority of shoppers it has heard from. The company said the new system replaces a one-size-fits-all approach with one that better accounts for and provides information about factors like the number and weight of items in an order and the distance the worker will have to travel, while keeping the average earnings on the platform consistent with what they were before.

Because Instacart pays at least enough to ensure that its contribution plus the promised tip would total at least $10 for an order, a customer’s higher tip could lead Instacart to pay less on a small trip, according to the company, but that wouldn’t happen on larger jobs. Instacart said it won’t retaliate against shoppers for providing feedback, and that it expects to continue to tweak the payment system.

The fracas over the payment algorithm is the latest workplace controversy for the San Francisco-based company, which relies on a mix of some 70,000 employees and independent contractors to swiftly deliver shopping bags from grocery stores like Fairway and Key Food to customers in all 50 U.S. states and Canada. Instacart had been the exclusive delivery service for many Whole Foods stores, but the two are ending their agreement after Amazon.com Inc. bought Whole Foods in 2017.

Instacart agreed to pay $4.6 million in 2017 to settle a class-action lawsuit brought by workers classified as contractors and to change its user interface to make clear the difference between a tip and a “service fee,” money that can go to the company instead of the worker. In California, Instacart has joined eight other gig-economy firms in urging lawmakers to shield them from a state Supreme Court ruling making it harder to treat workers as contractors rather than as employees entitled to minimum wage –- a verdict the companies warned would “decimate businesses.”

The workers behind the petition said that under the new system, generous tips promised from customers when they place an order on the app trigger lower pay from the company itself. If customers instead promise just 22 cents as a tip when they make an order, and then either adjust the reward higher after delivery or tip in cash, the workers say customers can “keep Instacart from stealing our tips.”

“As a shopper, now I feel like, we’ve made you all this money,” said Mia Kelly, who signed the petition, “and then you’re going to do this to us?” She said the change in the pay system has cut her daily earnings, before deducting expenses, from $200 a day to less than half that.

Kelly and other Instacart workers have been organizing via Facebook discussions, video conference, and in-person meetings in Seattle, with help from the union-backed advocacy group Working Washington.

The Instacart petition calls for the company to make the default tip option 15 percent rather than 5 percent, establish a minimum rate per hour and per trip, provide workers with a clear breakdown of how their pay was calculated and cease factoring in tips when it considers how much to pay.

Instacart said in October it had raised almost $1 billion from investors in 2018, valuing the company at $7.6 billion.

To contact the reporter on this story: Josh Eidelson in Washington at jeidelson@bloomberg.net

To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Molly Schuetz, Andrew Pollack

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