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A local news story reports the following:

Workers behind Instacart, the grocery delivery company and app, say they’re getting punished for getting a tip.

People who shop and deliver for the app say the higher the tip, the less wage they make – and that the company is using customers’ tips to subsidize wages. [...]

Working Washington, a worker's rights group, shared an even more egregious example on its website. https://www.workingwa.org/instacart-eighty-cents

It shows without a $10 customer tip, an employee earned only 80 cents for more than an hour of work.

“There's the expectation when you're tipping somebody is that the worker is getting the tip, not the company,” said Sage Wilson, a WorkingWA spokesperson.

A customer of Knudson’s said he thought his tip went straight to her on top of her pay, and had no idea about the accusations.

However, Instacart denies the charge:

An Instacart spokesperson KIRO7 reached by phone denied that the company is mishandling employee tips.

The company said that by changing it’s [sic] pay structure, it intended to bring more transparency, and that shoppers' pay would stay the same.

Does the tip function in the Instacart app pay money to the company instead of the shopper?

Community
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Avery
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    If screenshots and the company addressing a strawman instead of the real issue isn't enough for you, what evidence would you accept? – Kevin Jan 30 '19 at 19:22
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    Instacart isn't denying the charge in that quote. They're dodging. "Pay would stay the same" potentially describes exactly what is alleged to have happened. – ceejayoz Jan 30 '19 at 20:42
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    It should be noted that the laws on this in the US vary by state. Some state laws would not allow tips to be deducted from wages. – Daniel R Hicks Jan 30 '19 at 22:09

1 Answers1

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This is not an unusual pay structure for a tip-based position. Waitresses and bartenders have a similar pay structure where they have a base hourly wage which is far below the minimum wage. Any tips they earn adds on to their pay, and if their total tips totals to less than the mandated minimum wage then the company pays them up to minimum, but the tip needs to first overcome minimum wage before it actually becomes additional tip on top of their pay. Source: https://www.dol.gov/general/topic/wages/wagestips

One interesting interaction with this sort of pay structure is that employees who make just a bit above the minimum wage, would see no benefit from an increase in the minimum wage due to this tip-based pay structure, except on slow days. There is some speculation that completely getting rid of tipping as a practice would better allow tip-based positions to be better able to negotiate a true wage.

Key point in this story though, is that the employee did receive the customer's tip money. Just that Instacart did not have to pay the employee much additional money for his wage on top of that as the tip already covered it.

Shorlan
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    The question said is the company in fact reducing the employee's pay by the amount of the tip, as suggested in the new story. The answer you have provided says in essence, yes that's right, but then in your analysis you said that the employee received the tip. If the employee makes the same amount regardless of tip, but the company has to pay them less, then it's pretty clear that the company is getting the tip, not the employee. Whether this is legal or even common is pretty much irrelevant in my opinion. – Ted Delezene Jan 30 '19 at 23:41
  • Does Instacart pay an hourly wage? – Avery Jan 30 '19 at 23:56
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    The shoppers in question are **not** employees; they are [contractors](https://shoppers.instacart.com/role/full-service#role-description). Therefore, the page linked in the answer does not apply. According to [their contract](https://shoppers.instacart.com/contracts/2017), "Instacart does not pay earnings by salary or by an hourly rate." – Laurel Jan 31 '19 at 00:56
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    @Avery Not to their shoppers; see above. – Laurel Jan 31 '19 at 00:57
  • Ahh, I see my mistake was thinking that the rules regarding tip-based employment were relevant for independent contractors as well. It seems this is not the case as an independent contractor is not considered an employee. – Shorlan Feb 01 '19 at 03:44