Instacart Resolves City of S.F. Worker Misclassification Case for $5.25M

The City of San Francisco secured a $5.25 million settlement from Instacart after an Office of Labor Standards Enforcement (OLSE) investigation into the company’s compliance with two San Francisco labor laws.

The vast majority of the settlement, $5.1 million, will go directly to about 5000 Instacart workers who provided services and made deliveries in San Francisco between 2017 and 2020, and $150,000 will cover settlement administration and OLSE’s enforcement costs.

“This is the City’s second major settlement directly benefiting delivery app workers in San Francisco,” said City Attorney David Chiu. “We hope this sends a strong message that the City aggressively investigates compliance with our labor laws and works hard to ensure workers are treated fairly. I am grateful to the OLSE staff and our attorneys who made this win possible.”

After widespread reports of app-based tech companies misclassifying workers, OLSE initiated an investigation into Instacart’s compliance with San Francisco’s Health Care Security Ordinance (HCSO) and Paid Sick Leave Ordinance (PSLO).

The HCSO requires employers with 20 or more workers to spend a minimum amount on health care benefits per covered employee. The PSLO requires employers to provide sick leave to all employees in San Francisco. OLSE has the authority to enforce both the HCSO and PSLO.

Over 5,000 Instacart workers who made deliveries and provided services in San Francisco between 2017 and 2020 will directly benefit from the settlement between the parties. Many of the workers covered by the settlement are essential workers who were making deliveries in 2020 at the height of the pandemic. Within 45 days of the signed agreement, Instacart is required to engage a settlement administrator and send settlement funds to the administrator to be distributed to workers.

The announcement represents the second largest settlement benefitting workers in OLSE’s twenty-year history. Following a similar investigation, OLSE secured a $5.325 million settlement for DoorDash workers in 2021.

San Francisco ordinances require all employers with 20 or more workers to “spend a minimum amount” on health care benefits for each employee, the city said in a statement. The city also requires all employers to offer paid sick leave.

Instacart, in a statement to Winsight Grocery Business said it was pleased to have reached a settlement with the city. It also said “Instacart has always properly classified shoppers as independent contractors, giving them the ability to set their own schedule and earn on their own terms,” the company said.

“We remain committed to continuing to serve customers across San Francisco while also protecting access to the flexible earnings opportunities Instacart shoppers consistently say they want.”

The San Francisco settlement comes just three months after Instacart was ordered to pay $45.6 million to settle a labor-related case filed by the city of San Diego in 2019. That judgment covered about 308,000 people who worked for the tech company from September 2015 through December 2020 who were classified as independent contractors.

Instacart Resolves City of S.F. Worker Misclassification Case for $5.25M

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