Dive Brief:
- Instacart has filed a federal lawsuit seeking to invalidate several New York City laws set to go into effect in January that collectively govern how third-party grocery delivery workers are paid, including establishing minimum payment rates and laying out tipping standards.
- The laws are unenforceable because they are preempted by federal and state law, the city’s own policies and the U.S. Constitution, the company claims in the suit, filed Tuesday in the U.S. District Court for the Southern District of New York.
- New York City’s effort to regulate how the grocery delivery industry compensates workers follows the city’s enactment in 2024 of legislation that maintains limits on fees that third-party delivery services can charge restaurants.
Dive Insight:
Instacart is partially basing its objections to New York City’s drive to regulate payment terms for grocery delivery services on its contention that the city is wrongly lumping it with the restaurant-delivery sector.
While the City Council has moved to extend regulations that target restaurant delivery to grocery delivery, linking the two sectors is improper in part because workers generally use motor vehicles to transport groceries to customers while people delivering restaurant meals in the city can use mopeds or e-bikes.
Allowing the laws to go into effect would harm its business, Instacart said in the suit. “Without immediate relief, Instacart will be forced to restructure its platform, restrict shoppers’ access to work, disrupt relationships with consumers and retailers, and suffer constitutional injuries with no adequate legal remedy,” the lawsuit claims.
The City Council in September overrode vetoes by New York City Mayor Eric Adams of two of the laws Instacart is asking the court to invalidate. Those laws extend protections for food-delivery workers to all people who make deliveries in the city as contractors and require companies like Instacart to meet or exceed minimum payment standards for grocery delivery workers set by the city’s Department of Consumer and Worker Protection.
The other three laws, which require third-party food and grocery delivery companies to offer customers a tipping option of at least 10%, make the tipping option available before or when a customer places an order and pay workers within a week of the end of a pay period, were enacted in July after the mayor did not take action on them within 30 days after they were passed.
Instacart said in a blog post about the lawsuit that while the city spent a year analyzing the potential impact of regulations on the restaurant delivery sector and delayed the implementation of those requirements, it is not doing so for grocery delivery.
“Instead, the City jumped to the flawed assumption that restaurant delivery and grocery delivery are the same. They’re not. One is a convenience; the other, an essential service that many — including those facing health, mobility or transportation barriers — depend on to access nutritious food and everyday necessities,” the company said in the post.
In an emailed statement, the Department of Consumer and Worker Protection said Instacart pays workers only $13 per hour, which it described as unacceptable in New York City.
“App-based grocery delivery workers, like all workers, deserve fair and dignified compensation for their labor, and it is disappointing that Instacart disagrees,” the department said in the statement.
The department is currently finalizing a rule that would lay out how it will extend the $21.44 minimum hourly pay rate that applies to restaurant delivery workers in the city to people who deliver groceries. The city expects to publish the rule on Monday.
