Instacart has agreed to pay $46.5 million to approximately 300,000 workers following a lawsuit filed in 2019.  In addition to the back pay to workers misclassified as independent contractors, Instacart will contribute $6 million as a penalty to the California Consumers Protection Trust Fund.

Misclassification of food delivery workers as independent contractors is now illegal under California Assembly Bill #5 (AB5) that protects non-formally employed (gig) workers although the law is subject to Proposition #22 that has yet to be ruled constitutional.

It is possible that AB5 will be superseded by a Federal law that will define the status of delivery employees. The criteria will include:-

• The degree of permanence of a work relationship
• The extent of investment by a worker in a delivery vehicle, cycle or other transport
• Whether the delivery service is critical for the business of the employer
• Whether the employer controls schedules
• Whether the worker has any capability to manage net income from conducting delivery operations

Retailers and companies benefiting from gig workers maintain that any interference in the relationship between their companies and employees will result in inflation with considerably higher costs to consumers and will deprive many unskilled individuals of an income.