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Instacart Again Resets Compensation Scheme In Response to Gig Worker Pressure

Photograph courtesy of Instacart

In the wake of a yet another outcry from its contract employees, Instacart is once again revising its compensation program.

The company said it would no longer decrease the amount it contributes to worker base pay based on the size of their tips.

The move reverses changes introduced in October and deployed nationwide late last year that Instacart said were intended to increase transparency and consistency across orders, particularly by increasing guaranteed payments on small orders. However, workers demonstrated that practice resulted in tips for some orders being used by Instacart to pay the higher guarantees on small orders. And in some cases, they said, higher tips resulted in less pay for workers.

In a blog post addressed to shoppers, Instacart CEO Apoorva Mehta said the company would now separate tips from Instacart’s contribution to shopper compensation and would retroactively compensate all shoppers whose tips were used that way. The company is also instituting a higher guaranteed “floor” for payments and said all tips would be separate and in addition to a shoppers’ compensation.

“By delivering to and for our customers, you’ve become household heroes for millions of families across North America,” Mehta said in the post. “This past week, however, it’s become clear that we’ve fallen short in delivering on our promise to you.”

Working Washington, a group representing the interests of gig workers, in one case produced evidence of a 69-minute delivery with a $10 tip resulting in Instacart paying the worker 80 cents for the job—or what Instacart calls a “batch”—including mileage compensation.

Mehta acknowledged that situation in his post. “As we looked at some of the extreme examples that have been surfaced by you over the last few days, it’s become clear to us that we can and should do better. Instacart shouldn’t be paying a shopper 80 cents for a batch. It doesn’t matter that this only happens 1 out of 100,000 times — it happened to one shopper and that’s one time too many. We believe that these new guaranteed floor minimums will better protect our shoppers going forward.”Behind exploding demand for grocery delivery and the rash of new retail stores now offering delivery service, jobs for independent contractors have also grown, as have conflicts between them and the services that pay them. The issue illustrates the difficulty of orchestrating profitable grocery last-mile delivery. In 2016, controversy erupted over Instacart removing a tip option for shoppers in exchange for higher delivery commissions, only to reintroduce tipping a month later. In 2017, the company settled a lawsuit over how it was classifying shoppers. Most recently an online petition with 4,600 signatures and pressure from groups such as Working Washington brought new worker dissatisfaction to light.

DoorDash, a courier company employing independent drivers to make deliveries primarily for restaurants, is facing similar criticisms over its tip policy as Instacart has experienced.

When Instacart rolled out new earnings plan last year, it was careful to say the changes—which included alterations to its requests proving shoppers a more precise indication of particular and an estimated pay—came in concert with feedback from shoppers. “In every test market, our shoppers have told us they prefer new earnings to the existing structure,” the company said.

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