Instacart sues NYC over worker pay, tipping laws that would ‘degrade’ business

Instacart sued New York City on Tuesday to block enforcement of five laws affecting the grocery delivery company, including rules governing minimum pay for app-based workers and disclosures to customers about tipping.

According to a complaint filed in Manhattan federal court, Congress forbade state and local governments from regulating prices and services for customers who use platforms such as Instacart, while New York’s state legislature “has long taken charge” of minimum pay standards.

Instacart, based in San Francisco, also said the US Constitution prevents states and cities from discriminating against commerce by out-of-state companies.

The laws will take effect on Jan. 26, and, absent an injunction, would harm consumers and grocers by raising delivery costs, Instacart said.

“This legal challenge is about standing up for fairness, for the independence that tens of thousands of New York grocery delivery workers rely on, and for affordable access to groceries for the people who need it most,” Instacart said in a blog post.

The New York City Department of Consumer and Worker Protection, which is one of the defendants, had no immediate comment.

Instacart is the trade name for publicly traded Maplebear.

Laws would ‘degrade’ Instacart, company says

The lawsuit targets Local Law 124, which requires companies to offer grocery delivery workers the same minimum pay that restaurant delivery workers are eligible for.

Instacart also objected to Local Law 107, which requires consumers to get options to tip at least 10% of the purchase price or manually enter what to tip. The other laws require additional recordkeeping and disclosures.

According to Instacart, the laws are an outgrowth of laws affording more rights to restaurant delivery workers, who saw business surge during the pandemic.

“Instacart’s business depends on the flexibility, independence, and convenience that its platform offers,” the complaint said. “The local laws will degrade that business.”

Absent an injunction, “Instacart will be forced to restructure its platform, restrict shoppers’ access to work, disrupt relationships with consumers and retailers, and suffer constitutional injuries with no adequate legal remedy,” the complaint added.

Mayor Eric Adams opposed the minimum pay law, which New York City Council passed over his objections in September, and did not sign the tipping law.