On the heels of a $400 million round at a $3.4 billion valuation, Instacart has agreed on a $4.65 million fee to settle a class-action lawsuit around claims that the on-demand grocery delivery startup misclassified its personal shoppers as independent contractors, and also failed to reimburse them for their work expenses, Recode reports.
There are more than 31,000 Instacart shoppers involved in this class-action suit, which means each of them is not actually going to receive that much money. The most active plaintiffs named in the case, Arlin Golden, Dominic Cobarruviaz and Batya Weber, will receive $5,000 each. Other named plaintiffs will receive either $500 or $1,000 each.
Maybe this win isn’t really about the money, but rather the changes Instacart will implement. As part of the proposed settlement, Instacart will clarify the difference between a service fee and a tip — something that Instacart has received flack for in the past.
The company also has agreed to disclose to potential new shoppers upfront that Instacart does not offer insurance and that commercial insurance may be required depending on where they work.
“This change will prevent situations where Shoppers are blindsided when they get into an accident on the job and end up having their claim denied or getting dropped by their personal insurance carrier,” the proposed settlement states.
As part of the settlement, Instacart will change its deactivation policy from being able to fire shoppers for any or no reason at all. Instacart also has agreed to implement a formal policy that would only allow them to fire a shopper for a specific reason.
Update: “We have settled a nationwide class action lawsuit, primarily over the classification of our shoppers as independent contractors,” an Instacart spokesperson told TechCrunch. “This is a positive, early resolution for the Company, and we look forward to finalizing the settlement.