Instacart Shoppers Qualify As Employees, A San Diego Judge Rules

A county judge in San Diego has ruled that Instacart shoppers should be classified not as independent contractors but employees under California's new "gig economy" law.

The judge issued a preliminary injunction calling for Instacart to "work with us to craft a meaningful and fair solution" to reclassify its workforce. State law mandates that employees -- unlike gig workers -- are entitled to worker's compensation, unemployment benefits, unionization rights and more.

Instacart is a same-day grocery delivery service that allows customers to place grocery orders through a mobile app. The items are then purchased and delivered by a 'shopper' who drives the order directly to the customer's home.

The court argues that the basis for the ruling is that the shoppers perform a "core function" of Instacart's business essential to their business model of "groceries delivered in as little as one hour."

While an injunction merely serves as an authoritative warning or order, the court ruling marks a major milestone following the signing of Assembly Bill 5 (AB-5), which attempted to reclassify gig workers as employees to qualify them for health insurance and other workplace benefits. AB-5 initially targeted rideshare companies Uber and Lyft, but the bill was worded broadly enough to include all California-based contract workers such as freelance writers, designers, and musicians, many of whom have lost contracts as a result, according to CNN.

Ride-share drivers and supporters with the Independent Drivers Guild protest outside New York City Hall as they rally for wage enforcement and a drivers' bill of rights, on September 10, 2019 in New York City. After winning landmark minimum wage pay rules for app-based drivers in New York City, members of the Independent Drivers Guild say pay and enforcement of the new rules is falling short and they are blaming the citys Taxi and Limousine Commission (TLC). The drivers guild is also taking issue with the TLC for continuing to allow new for-hire drivers on the road this year despite previously announcing there would be a cap.
Getty Images | Drew Angerer

Instacart says it will appeal the injunction. "We disagree with the judge's decision to grant a preliminary injunction against Instacart in San Diego," the company said Monday night in a statement by Instacart spokeswoman Natalia Montalvo, provided to NBC News.

San Diego City Attorney Mara W. Elliott first filed a lawsuit against Instacart in September on behalf of the People of the State of California. She argued that Instacart workers did not meet the criteria, known as the 'ABC test' for an independent contractor as set into law by AB-5.

According to a 2018 ruling by the California Supreme Court, as explained by Investopedia, a worker must meet the following criteria to be disqualified from employee status:

A. the worker is free from the control and direction of the employer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

B. the worker performs work that is outside the usual course of the employer's business;

C. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

In her case against Instacart, Elliott argued that the company "exercises complete control" over the work that is done by its shoppers by requiring them to use the app, tracking their arrival at a store, routing them through the aisles to retrieve each item, and sending driving directions to customers' homes.

The order, which was formally served on the parties Monday, will not take effect until Friday, the same day as a hearing related to arbitration -- another key issue in the case.