Instacart delivery workers are classified as independent contractors, which allows the company to flout basic labor laws. This is commonplace in digital age 'gig economy' jobs, but dates back to the early days of food delivery - e.g., most pizza delivery drivers are classified as independent contractors.

That having been said, the concept of defining contractor wages in relation to customer tips is new to me. I could see a legal argument being made in the employer's favor if the worker gave due consent to the transaction.

The idea here would be: Instacart states somewhere on the order prior to pickup 'if you choose to accept this order, you will receive $10, of which $.80 will come from us.' Since the delivery worker isn't running a 'shift' as an 'employee,' but just coincidentally happens to be running Instacart orders for 10 hours straight, this counts as one of many transactions that they've accepted and hence waived the legal right to complain about.

If this legal fiction sounds absurd to you, you're not alone.

I would agree, if the app didn't say "tip for delivery person" instead of "tip for instacart" or something maybe more ambiguous like "tip." Take a look at the screenshots of their app being discussed here: https://www.forbes.com/sites/bizcarson/2018/04/24/instacart-...

Are you sure those aren't the upcoming changes? There's another older screenshot further down that has more ambiguous wording.

Edit: welp, even that says it 100% goes to the person doing the shopping. Gross.

Insidious, right? 100% of the tip technically does go to your shopper.

Welcome to the world of 'tipped wages'. In my state, every paycheck, the first $520 worth of tips effectively goes straight to your employer for the purposes of paying your minimum wage and then you can have whatever is left over.

What’s more, this article is made by employees from Washington state, where they don’t even have a separate tipped minimum wage.

I think that may be the theory Instacart is using, but I suspect it hasn't been tested, and that they're doing this under the move fast, flout legal conventions until someone makes you stop startup strategy.

> Instacart delivery workers are classified as independent contractors

Only Instacart believes this.

They don’t believe it either, but it’s convenient lie, like corporations being people. It’s ridiculous, but as long as it’s the law and the people benefiting tip their politicians well, whomp whomp.

Dismissing corporate personhood as “a convenient lie” is pretty flip when the Supreme Court has ruled it is enshrined in the constitution.

But boy I’d love to dis-enshrine it.

Let’s not overstate the issue. The SCOTUS has a history of convenient lies, from the legal basis of segregation to fuckery around evolution.

> You can't just throw the word in your app and do what you want with the money it generates.

That's simple fraud. It's like going door to door collecting money for a charity and then just pocketing the money. Potentially Instacart will need to refund those 'tips'

I'm very curious to find out what may be in instacart's TOS here. Because at face value, and without hyperbole, this does look like it could be fraud. It seems unlikely that their legal team was not aware of potential issues here.

The strange thing about this is that it may actually be fraud against the people buying from instacart. The ones giving the tip. I'm curious then what kind of damages a customer could sue for beyond the amount of the tip. And I'm also curious if instacarts TOS for customers forces arbitration and prevents class action lawsuits.

This should be interesting to watch unfold.

Yup, and Washington state specifically does not allow tip credits. Tips in WA are always on-top or hourly wage. (Which is why even a terrible bartender in Seattle can do pretty well.)

But as soon as someone 1099's you, you're out of luck. Found this out the hard way when I got 1099'd by a startup I was working for in 2017. The IRS has a mechanism on the Federal level to fix things enough to avoid the higher tax burden, but WA state explicitly requires a W2 from an employer for even the most basic of unemployment benefits (the determination letter from the IRS apparently doesn't count).

So go the other way and report them for abusing 1099, for 1099 to be legal they can't even directly give you any hardware, you need to pay for it yourself, I think there are even laws about using their desks.

What I'm trying to say is that even if you report them for 1099 on the federal level, you do not necessarily convert to "employee" status in a state's eyes. This has an impact on your ability to file for unemployment, tax burdens, etc. You'd think that the federal opinion would influence the state's, but there's a breakage.

Also add on the fact that in Seattle the tipped minimum wage is 12/hr, where you only need to serve 20 dollars an hour worth of food in order to be making above minimum wage with tips should you also be busing your own tables.

> My understanding is that the Fair Labor Standards Act does allow for employers to whithold tips

I think this sentence says the opposite of what you intended it to.

Correct. I fixed it.

Isn't this exactly what restaurants all over the country do? Tips count as wages, and then the employer pays on top of that to make up the difference.

My understanding is that wages from the restaurant are fixed and tips do not count towards them unless the employee does not hit minimum wage- at which point the restaurant has to pay them more. I have never heard of a restaurant paying an employee less because they got more tips.

But I have never worked in a restaurant so I could be completely wrong.

How many restaurants have $1.9B in funding and are valued at ~$8B? There's also an obfuscation on payment to workers that doesn't happen in a restaurant.

They don't actually withhold the tip. The sentence you quoted is being sloppy. If the tip was $50, the worker would get the full $50.

The problem is that they use the tip as an excuse to pay basically nothing. It's not acting like a real tip.

This is a distinction without a difference. There is no practical difference between paying less "because tip" and not paying the tip. The legal system is not staffed by robots, either. I don't see how they can defend a class action regardless of what words they've written on a TOS.

> There is no practical difference between paying less "because tip" and not paying the tip.

There is, because the pay can't go negative.

> The legal system is not staffed by robots, either. I don't see how they can defend a class action regardless of what words they've written on a TOS.

It depends on what the lawsuit is for. Normally we have things like "minimum wage" but those don't apply if you manage to convince everyone it's a contractor situation. If they can be classified as employees then there's all sorts of lovely anti-tip-taking law. But that's a big if. And I don't think contractors have tip laws? It's not generally illegal to say one thing about how your company allocates money coming in and then do another.

Also the increasingly common practice where a seller takes your money, wrongs you in the most blatant way, such as just not sending half of your order (Instacart), charges you for wasting your time and never providing any service (Uber) and when you complain, they keep your money and give you their Monopoly money instead.

I feel like for someone somewhere in the attorney general's office, prosecuting these should be someone's full time tax paid job.

I hope that one of the employers in the new “gig economy” gets taken to court over the contractor-versus-employee issue and that the case sets a sane precedent. An old joke (“western koan”?) comes to mind:

Suppose that we decide to call dogs cats. In that case, what is a domesticated canine? Answer: it’s a dog, whatever you choose to call it.

(Pretty sure I butchered that, but hopefully the point still came through.)

So wait, isn't this a good thing? It discourages people to tip.