Instacart sues city over minimum wage laws for grocery delivery workers

Instacart is suing New York City in an attempt to roll back new worker protection and transparency laws before they take effect next month, which would, among other things, require the grocery delivery service to pay workers $21.44 an hour.

“If the local laws take effect, they will irreparably harm Instacart,” reads the company’s complaint filed Monday against the city, its Department of Consumer and Worker Protection (DCWP) and its commissioner, Vilda Vera Mayuga. “Instacart will be forced to overhaul its platform and business model in the city.”

The suit, filed in the U.S. District Court for the Southern District of New York, targets Local Law 124, which essentially acts to include grocery delivery companies in Local Laws 107, 108, 113 and 123, which were passed to improve working conditions and wages for restaurant delivery workers under companies like UberEats and Doordash by raising the minimum wage for those workers to $21.44/hour, changing the way tipping options are presented to consumers and increasing record-keeping requirements for companies.

Instacart argues it shouldn’t be lumped in with requirements for restaurant delivery companies because their grocery delivery model is different and because the laws will require the company to pay workers for time they are “on-call,” they will reduce flexibility for their workers.

“Because on-call time will become a compensable input in calculating shopper pay, Instacart will no longer be able to allow unlimited, open access to the platform without incurring significant new costs,” the company argues. “To manage these new costs, Instacart will have to take several steps, including…limiting the windows during which shoppers can go online; capping the number of shoppers who can be online in a given area at a given time; and tightly managing how shoppers use their time while online.”

Instacart’s suit received sharp criticism from the DCWP, council members who introduced the local laws and Los Deliveristas Unidos , an advocacy group representing food delivery workers in the city.

“App-based grocery delivery workers, like all workers, deserve fair and dignified compensation for their labor, and it is disappointing that Instacart disagrees,” the DCWP told amNewYork Law in an emailed statement. “Instacart shoppers are currently paid just $13 per hour, with no benefits, no pay for waiting time, and no reimbursement for vehicle expenses. No business in New York could legally compensate employees at such a low level.”

“These workers deserve better,” the department’s statement continues. “We will continue to fight to protect and improve their rights, close loopholes that undercut their wages, and ensure every grocery delivery worker receives the fair pay and protections they are owed.”

Instacart has previously said it doesn’t necessarily oppose raising the minimum wage for its workers, but takes significant issue with the portions of the law that would alter its business practices. The company has also argued the laws may result in increased costs to consumers.

Its Monday lawsuit argues the local laws violate the Constitution, city charter and federal and state law. Instacart says that, because it’s an out-of-state company and because sometimes deliveries involve shoppers crossing state lines, the laws count as an attempt to regulate interstate commerce, something the Constitution’s dormant commerce clause says only Congress can do.

The complaint also argues that their shoppers are motor carriers, and therefore the local laws violate the Federal Aviation Administration Act, which prevents state and local governments from regulating the price and service of motor carriers. It further argues that the state should be in charge of minimum pay standards, and that the laws improperly delegate legislative power by allowing the Department of Consumer and Worker Protection to carry out the policy choice of whether and how to create a separate grocery-delivery pay regime, something only the city council should do, the company argues.

Instacart says over 1,600 of its workers have sent in complaints to DCWP over the laws, and that the National Supermarket Association, which represents independent grocers in the city, also opposes the laws.

“Shoppers rely on the flexibility and independence that Instacart’s platform offers,” Instacart’s suit reads. “The changes that Instacart will have to undertake in response to the Local Laws threaten to undo central features of the platform, especially those allowing shoppers flexibility to work as they want, including by declining batches and logging into the platform without accepting work.”

Eli Zev Freedberg, Alexander Thomas MacDonald of Littler Mendelson; and Eamon Paul Joyce and Jacob Steinberg-Otter of Sidley Austin appear on the brief for Instacart.

City Council Members Shaun Abreu and Sandy Nurse, who co-sponsored Local Law 124 and have supported the related restaurant delivery worker protection laws, argued that the fact Instacart was suing over the laws demonstrated their necessity, with Abreu alleging the company was attempting to “sidestep fundamental protections for workers.”

“Instacart is worth $10 billion, but they would rather bankroll a lawsuit than pay workers a living wage,” Nurse told amNewYork Law. “$21.44 an hour is apparently unbearable for Instacart’s owners, who seem committed to poverty wages. This law is critical for creating pay parity across the delivery app sector and securing dignity for this workforce.”

Ligia Guallpa, the co-founder of the Los Deliveristas Unidos campaign, said extending the higher minimum wage and worker protection laws to Instacart and grocery delivery workers is “about basic fairness,” and ensures those workers don’t shoulder job-related costs on their own as Instacart reports record profits.

“For more than a decade, these workers have been forced to subsidize the company’s billion-dollar business model, scraping by on as little as $5–$7 per order and spending unpaid hours waiting on the app,” Guallpa told amNewYork Law. “Local Law 124 finally guarantees workers a real hourly wage that helps cover the actual costs of the job, from vehicles and maintenance to gas, insurance, and basic health expenses.”

He criticized Instacart for spending $1.5 billion of its 2024 revenue buying back its own stock to increase its value and emphasized that restaurant delivery workers have already seen $700 million in benefits since the local laws passed, arguing that grocery delivery workers are no different and deserve the same “material benefits, stability and security.”

“As the economic engine behind this industry, these workers deserve a living wage and support for the expenses that keep the entire system running,” Guallpa said. “No delivery worker – whether they bring meals or groceries to your door – should earn poverty wages while billion-dollar companies fight to keep them poor.”