After an uproar from delivery workers and customers, Instacart, the Silicon Valley delivery start-up, is reversing a pay practice that drew accusations of tip theft.
In a blog post on Wednesday, Apoorva Mehta, Instacart’s chief executive, admitted that the company had “fallen short” with a policy put in place last year that applied workers’ tips toward guaranteed minimum payments of $10 per order, rather than paying them out on top of the guarantees.
“We heard loud and clear the frustration when your compensation didn’t match the effort you put forth,” Mr. Mehta wrote in an open letter to Instacart’s shoppers.
From now on, Mr. Mehta said, tips will always be calculated separately from Instacart’s contribution to worker pay. He said the company would pay a minimum of $5 for orders that required only delivering an item, and $7 to $10 for orders that involved picking items off shelves. Instacart will also retroactively compensate workers whose tips were included in the guaranteed minimums under the old system.
“While our intention was to increase the guaranteed payment for small orders, we understand that the inclusion of tips as a part of this guarantee was misguided,” Mr. Mehta said. We apologize for taking this approach.”
The company’s contract workers, known as shoppers, had complained that the old practices lowered their base pay, essentially using customers’ tips to subsidize Instacart’s own expenses. A group of shoppers sued the company, and Working Washington, a labor group in Seattle, collected more than 1,500 signatures from Instacart shoppers demanding changes to the tipping policy.
DoorDash, a competing delivery service, has also been criticized for a similar policy. On Wednesday, a DoorDash spokeswoman declined to comment when asked if the company was considering changing its policy after Instacart’s move.
In a private Facebook group for Instacart shoppers, members greeted the news of the company’s policy reversal with cheers.
“I can’t believe it! Back pay!” one worker wrote.
“THIS is why you stand up for yourself against corruption,” wrote another.
But Working Washington said it would continue to push the company.
“It’s not over,” the group said in a statement. “Workers continue to call for a transparent pay structure so they can verify that what the company says they’re going to do is what they’re actually doing.”