Instacart says its profit margins will be hurt by having to pay essential gig workers an extra $2.00 per order during the coronavirus pandemic.
Instacart has filed a lawsuit against Seattle in protest of a new law that requires food delivery companies to pay gig workers at least $2.50 in “premium pay” per order.
The Seattle Times reports that the emergency law was passed by Seattle’s city council on June 15th, then signed into law by Mayor Jenny Durkan on the 26th. The “premium pay” mandate applies to grocery app companies, like Instacart, as well as traditional delivary applications like DoorDash, Postmates, and Uber Eats.
The initiative, notes the Seattle Times, was advanced by city councilmembers Lisa Herbold and Andrew Lewis. The two worked with labor advocacy organization Working Washington to draft and eventually pass the law.
Altogether, the emergency ordinance justifies pay raises for delivery gig workers by considering their work an essential service—a descriptor that has already been applied to postal carriers, supermarket clerks, and delivery drivers employed directly by brick-and-mortar restaurants. Under the law’s provisions, gig driver are given hazard pay and compensation for expenses incurred purchasing masks and sanitizing vehicles.
In its lawsuit against the city, Instacart claims that the emergency mandate is a violation of Washington State Initiative 1634, passed in 2018 and approved directly by voters. That initiative, says The Seattle Times, forbids local governments from imposing taxes or charges on groceries. Additionally, the same law prohibits taxes or charges on the “transfer and transportation” of groceries, too.
Furthermore, Instacart alleges that the premium pay requirement damages its economic viability and increases its costs.
Instacart, adds the Times, is also opposed to Seattle restricting companies from passing on premium pay costs to customers.
“We’re disappointed that the Seattle City Council and Mayor Durkan chose to disregard the needs of Seattleites in the midst of a global health crisis and widespread economic hardship,” Instacart said in a statement.
“This legislation is a blatant overreach of power, violating state and federal constitutional law and requiring […] companies to unsustainably subsidize service in Seattle for years to come,” the company said.
But Sage Wilson, a Working Washington spokesperson, pointed out that Instacart isn’t exactly hurting for profits—ever since the coronavirus pandemic hit the United States, the company has been netting record revenues.
“It must have been pretty expensive to pay a bunch of lawyers to dream up these absurd arguments but apparently the company has money to burn,” Wilson said. “The coronavirus pandemic has made Instacart’s CEO a billionaire and goosed the company’s value up to $14 billion.”
Similarly, Councilwoman Herbold suggested that not only can Instacart afford Seattle’s premium pay requirement, but that it might be more ethical for the company to support its contractors’ ability to earn an honest living.
“Instacart,” Herbold said, “would choose to let their drivers suffer during this pandemic instead of voluntarily supporting them.”
The Times notes that the pay boost is set to expire once the pandemic is better under control.