When Instacart launched in Buffalo last summer, it paid its full-service contractors $10 for every order they delivered, plus 40 cents per item they shopped. By last week, the rate had sunk to $3 per delivery, plus 40 cents per item.
But for some drivers, the real bone of contention is with delivery-only order rates – the amount Instacart workers are paid to pick up and deliver orders that are shopped at the store by someone else. That flat rate has dropped to $1.75.
With pay rates sinking, some local Instacart workers are organizing a strike. But without formal organization and with little leverage, some wonder how effective a work stoppage might be in achieving the goal of higher pay.
It highlights the difficulty contract workers face in the gig economy and revives the longstanding debate about whether Instacart, Uber and other gig workers have been wrongly classified as contract workers by companies looking to skirt labor laws.
It's an issue affecting more and more workers. Within the next 10 years, independent contract work is on track to encompass half the American workforce, according to research by Marist Poll for National Public Radio.
T.J. Newman said he enjoys the autonomy that comes with delivering for Instacart but, even at the higher pay rates, he was earning just $7.50 per hour with Instacart over the past few weeks.
"That’s not even minimum wage," Newman said. "Plus we have to deduct our expenses out of that."
So, starting March 16, he said about 75 Instacart workers plan to decline delivery-only orders, hoping Instacart will be forced to increase their rates to entice workers to pick them up again.
But that per-delivery rate is just one small piece of the puzzle, Instacart said. The rate per delivery might be set at $1.75, but the company's software "batches" deliveries so that workers can grab three to five orders at a time and deliver them in close proximity, representatives for the company said.
Workers get to keep the entire tip customers leave and don't have to share it with the part-time worker in the store who shopped the order. They also get extra pay of as much as $5 for extra large or distant orders. As a result, the company says, Instacart contractors averaged an hourly rate of $10.20 to $11.57 last week.
New York's minimum wage is $10.40 an hour.
By keeping rates low, more shoppers might use the service, and the increased volume could increase an Instacart contractor's pay, the company said. Instacart also said it is committed to working out a solution.
Some Instacart workers, however, remain concerned.
While they will occasionally receive three orders at a time, some say they more often receive only one order. Instacart workers and customers have also long said the tipping process in the app is too confusing, and that consumers often pay the company an optional service fee, mistaking it for their Instacart worker's tip.
Last month, Instacart said a bug in its system caused it to withhold shopper tips and charge service fees to customers who had waived it.
Will it work?
Technically, declining delivery-only orders is not a strike, because Instacart workers are contractors, not employees. But will the move have the desired effect of forcing Instacart's hand when it comes to wages?
That is going to depend on how many drivers decide to decline orders, whether new contractors would take the delivery-only orders at the lower rate and whether consumers support Instacart workers by not using the service, according to Kate Bronfenbrenner, director of labor education research at Cornell University's School of Industrial and Labor Relations.
Without formal unionization and with little leverage, it could be difficult, she said.
It also revives a debate: Are Instacart workers really independent contractors?
"Employers can't just say, 'We declare you an independent contractor and we won't pay you minimum wage,' " Bronfenbrenner said.
Contract workers do not receive the same legal protections or benefits as employees. They aren't eligible for worker's compensation or unemployment insurance and aren't granted minimum wage or overtime pay.
Under New York State Department of Labor, a contract worker generally has their own established business, advertises, has their own business cards and stationery and sets or negotiates their own pay rate.
"Instacart workers don't do any of those things," Bronfenbrenner said.
But some of the attributes the state outlines for employees don't fit either, such as requiring permission for absences or directly supervising the services performed.
Those gray areas leave lots of room for interpretation. So far, when workers have tried to allege a misclassification, the courts have ruled that gig workers at places such as Uber and Skip the Dishes are contract workers. But a recent California ruling found that GrubHub workers resemble employees, and suggested it sided with Grubhub only because of specifics with that particular contractor's case.
An uphill fight
Judging by similar efforts elsewhere in the country, the move here might not move the needle in the direction Instacart workers hope. Similar efforts in Austin, Texas, and St. Louis in November had no effect, Instacart told trade publication Food Dive, and Instacart said it doesn't expect customers will face any service disruptions in the Buffalo market.
Locally, Instacart delivers for Tops, Wegmans, PriceRite, CVS and Petco, with some of its part-time Instacart shoppers embedded in Wegmans stores.
Wegmans prides itself on employee satisfaction and has been named to Fortune's Best Places to Work list for 21 years.
But Instacart has faced a host of labor issues, and last year paid $4.6 million to settle a class-action lawsuit that accused the company of more than a dozen charges, including mishandling tips and failing to pay business expenses.
For now, Wegmans is keeping the issue at arms' length, saying that while it seeks to understand any concerns about the third-party vendor, "this is an issue between Instacart and its contractors."
"Instacart has shared that it is committed to providing competitive compensation to those they work with," Wegmans said in a statement.