Instacart has sued Seattle over the city’s new law that requires food delivery app companies to provide drivers with at least $2.50 “premium pay” per order during the coronavirus crisis.
The emergency law, passed by the City Council on June 15 and signed by Mayor Jenny Durkan on June 26, applies to grocery app companies like Instacart and to meal app companies such as DoorDash and Postmates.
Councilmembers Lisa Herbold and Andrew Lewis worked with the labor-backed advocacy organization Working Washington to advance the law. Like supermarket checkers and postal carriers, food delivery drivers are providing an essential service during the pandemic and are risking exposure to the virus while making as little as $3 per trip, Herbold and Lewis said.
The council members said their law would provide drivers with hazard pay while compensating them for costs related to personal protective equipment and vehicle cleaning. Delivery app drivers are independent contractors not covered by labor protections that apply to regular employees.
Before the pandemic began, Working Washington was lobbying City Hall to mandate minimum pay for food delivery app drivers, and Durkan was working on legislation to mandate minimum pay for Uber and Lyft drivers.
The lawsuit filed June 26 by Instacart and the Washington Food Industry Association says Seattle’s premium-pay requirement violates an initiative approved by Washington voters in 2018. Initiative 1634 prohibits local governments from imposing taxes or charges on groceries, including the transfer and transportation of groceries. The initiative was championed by industry players in response to Seattle passing a tax on soda pop in 2017.
The suit also says the city’s premium-pay requirement violates Instacart’s constitutional rights by commandeering the company’s business and rewriting its contracts with independent contractors.
The premium-pay requirement hurts Instacart by increasing its costs and threatening its economic viability in Seattle, the suit says, noting Seattle’s law prohibits app companies from offsetting the premium-pay costs by reducing the base pay their drivers earn. Grocery app companies also are prohibited from offsetting the premium-pay costs by adding customer charges.
Bloomberg and Seattle City Council Insight first reported on the lawsuit, which asks for Seattle to be barred from enforcing the premium-pay requirement and for the requirement to be struck down. The suit calls the penalties for violating the city’s law “draconian and disproportionate” because they can amount to nearly $22,000 per worker.
Under Seattle’s law, the premium pay requirement will be in place until the city terminates its declared COVID-19 emergency, and app companies will need to retain records related to the requirement for three years.
“We’re disappointed that the Seattle City Council and Mayor Durkan chose to disregard the needs of Seattleites in the midst of a global health crisis and widespread economic hardship,” Instacart said in a statement Tuesday.
“This legislation is a blatant overreach of power, violating state and federal constitutional law and requiring … companies to unsustainably subsidize service in Seattle for years to come,” Instacart added.
“We intend to defend the city in this matter, and we’ll investigate and respond to the claims,” said Dan Nolte, a spokesperson for City Attorney Pete Holmes.
In a statement, Working Washington spokesperson Sage Wilson said: “It must have been pretty expensive to pay a bunch of lawyers to dream up these absurd arguments but apparently the company has money to burn — the coronavirus pandemic has made Instacart’s CEO a billionaire and goosed the company’s value up to $14 billion.”
Herbold said app companies can afford Seattle’s requirement. “Instacart would choose to let their drivers suffer during this pandemic instead of voluntarily supporting them,” she said.