That's not necessarily true. Folks in the gig economy are often classed as "independent contractors" and thus are not subject to the Fair Labor Standards Act, including minimum wage laws. They also are not entitled to, nor almost ever receive, reimbursements for work expenses. When you are talking about using your own vehicle and paying for depreciation, mechanical work, and gas, this is considerable. It often winds up being an implicit loan against one's own vehicle.
I'd be surprised if calling something a "tip" makes it legally obligated to go to a contractor. I'm sure their lawyers are very aware of the law on this. As someone else said, there is almost certainly a binding arbitration clause. This removes the possibility of individual or class-action lawsuits.
edit: The abuse of the term "independent contractor" is just one of many examples of how labor law enforcement has become lax in the last several decades. How many people on this site aren't in management and work unpaid overtime?
This is absolutely illegal. They are defrauding customers. No one would voluntarily add money to an order if it was labeled as "donation to Instacart" instead of "tip". They are deceiving customers to get money from them.
This really probably doesn't add up to fraud. There's a difference between being scummy and crime. This should be illegal of course, but it really probably isn't. Restaurants illegally take tips from their employees all the time, which would be a fraud against customers in the same way as this case. However, they don't get into trouble for fraud against customers, but wage theft. That of course doesn't apply to Instacart.
> There is almost certainly a binding arbitration clause. This removes the possibility of individual or class-action lawsuits.
But it does not remove the ability of the court to overrule the clause itself. So someone could still sue Instacart knowing that it will be thrown out if the court decides to enforce the clause.
In my life experience, these things are almost always up in the air until a judge says otherwise.
Getting to the contractor thing, the most workers can really do is file IRS Form SS-8 and see if the IRS will release them of some of their tax obligations. Other than that, there's really not that much enforcement.
Source: I was a misclassified contractor in 2017 while working in WA state. IRS forgave some of my tax burden, but Labor/Industries and Employment Security are absolutely useless if you don't have a literal Form W2 to use.
>But it does not remove the ability of the court to overrule the clause itself. So someone could still sue Instacart knowing that it will be thrown out if the court decides to enforce the clause.
Which they will. There's been a few recent cases that have made mandatory arbitration clauses more-or-less bulletproof.
I wouldn't be so sure about their lawyers being "very aware" of the law. If they were, they wouldn't have called it a "tip" in the first place, as "tip" has a specific legal meaning in most states and in the US tax code.
In fact, I would hesitate to say that the lawyers for most startups have any clue what they're doing, as most seem to be in it to play startup lawyer rather than provide necessary legal advice to their client/employer.
That's a shame. I wonder if customers have any recourse? I'd feel absolutely defrauded if I found out a tip I made through a service like this was (effectively) going to the operator rather than the person who the app represented it as going to.
I don't think "oh the tip went to the contractor we just lowered their wages by the same amount" sounds convincing in a court room.
Neither major party is at all interested in doing this, only some on the left wing of the Democrats. Labor reform is opposed in unison from the entire business community, so it is extraordinarily difficult in our political system.
This isn't wage theft since they are independent contractors. It's more like a company stiffing a supplier. More of a civil than criminal matter. Of course, these folks wouldn't have the resources to sue anyway, even if they weren't bound by binding arbitration.
I think the question though is _why_ is that?
If I steal $950 from someone then it's criminal, but if I refuse to pay them what I agreed then it's civil. It's an odd discrepancy IMO.
Well, if you steal it, it's criminal, but that's simply because that's the definition of theft.
Taking stuff away from people, though, is not necessarily theft, and also not necessarily criminal. If you accidentally take someone else's property because you confused it with your own, for example, that's not criminal, but the other party still has a civil claim against you (namely, to be given back their property).
On the other hand, if you intentionally mislead someone into providing you with some service or product, promising to pay them for it, even though you never intended to pay, that constitutes fraud and is very much criminal.
Generally, it's criminal if it's in the interest of the public and civil if it is primarily in the interest of some party. Not paying some debt because you actually have doubts that you have to pay, or due to an honest mistake is not really something that affects anyone else. Someone intentionally causing situatons where others can't rely on them fulfilling their legal oblications can erode trust in a society, therefore it is in the public interest to prevent that. The boundaries can be fuzzy, but wage theft can very much be criminal.
> This isn't wage theft since they are independent contractors. It's more like a company stiffing a supplier.
Why do you keep saying things to this affect?
A company stiffing a supplier is going to rapidly find themselves without suppliers, or the supplier can afford to / accounts for being stiffed on some orders.
An independent contractor who works for one, or maybe two very similar types of, company is very much like an employee in every way that matters to that individual “independent” contractor, and literally nothing like a B2B supplier.
Additionally, you seem preoccupied with existing legislation as though it has some higher virtue, whereas in reality the law can be, and frequently is, unjust and absurd.
