Instacart says its profit margins will be impacted by key gig workers paying an additional $ 2.00 per order during the coronavirus pandemic.
Instacart has filed a lawsuit against Seattle to protest a new law requiring grocery workers to pay gig workers at least $ 2.50 in premiums per order.
The Seattle Times reports that the emergency law was passed by the Seattle City Council on June 15 and incorporated into the law by Mayor Jenny Durkan on June 26. The “Premium Pay” mandate applies to food app companies such as Instacart as well as traditional delivary applications such as DoorDash, Postmates and Uber Eats.
The initiative, according to the Seattle Times, was driven by City Council members Lisa Herbold and Andrew Lewis. The two worked with the Working Washington union to elaborate and ultimately pass the law.
Overall, the Emergency Ordinance justifies salary increases for deliverers by considering their work as an essential service – a descriptor that has already been used for postmen, supermarket employees, and deliverers who work directly in stationary restaurants. According to legal regulations, gig drivers receive a hazard payment and compensation for the cost of buying masks and disinfecting vehicles.
Seattle. Image via Wikimedia Commons / User: CommunistSquared. (CCA-BY-1.0). Public domain.
In its lawsuit against the city, Instacart claims that the emergency mandate violates the Washington State Initiative 1634, which was passed in 2018 and approved directly by voters. This initiative, according to the Seattle Times, prohibits local governments from levying taxes or food taxes. In addition, the same law also prohibits taxes or duties on the “transfer and transportation” of food.
In addition, Instacart claims that the requirement to pay the premium affects its profitability and increases its costs.
Instacart, the Times adds, is also against Seattle, which prevents companies from passing on premium costs to customers.
"We are disappointed that the Seattle City Council and Mayor Durkan have decided to ignore the needs of Seattle citizens amid a global health crisis and widespread economic distress," said Instacart in a statement.
"This legislation is an obvious excess of power that violates federal and state constitutional law and (…) obliges companies not to sustainably subsidize services in Seattle for years to come," the company said.
But Sage Wilson, a spokesman for Working Washington, pointed out that Instacart isn't exactly hurting profits – the company has had record earnings since the coronavirus pandemic hit the U.S.
"It must have been quite expensive to hire a few lawyers to come up with these absurd arguments, but apparently the company has money to burn," said Wilson. "The coronavirus pandemic has made Instacart's CEO a billionaire and increased the company's value to $ 14 billion."
Similarly, City Councilor Herbold suggested that Instacart not only can afford the Seattle premium payment, but that it could be more ethical for the company to support its contractors' ability to earn an honest living.
"Instacart," said Herbold, "would choose to make their drivers suffer during this pandemic instead of volunteering."
The Times notes that the raise will stop once the pandemic is better under control.
Instacart, Biz Group, is challenging the Seattle law requiring gig workers to pay for dangers
Instacart is suing Seattle for a law requiring coronavirus premiums to be paid for delivery app drivers