Questions Surround Instacart Grocery Delivery Following Ruling

RIVERSIDE COUNTY, CA — Instacart users in Riverside County may be wondering if their grocery home delivery service could be going away — or changing in the near future. It's a valid question.

On Tuesday, the city of San Diego obtained a preliminary injunction against the grocery delivery company Instacart, in the wake of a judge's ruling that the company misclassified its employees as independent contractors.

San Diego County Superior Court Judge Timothy Taylor's ruling stems from a lawsuit brought by San Diego City Attorney Mara Elliott, who alleged Instacart is sidestepping AB 5, a recently enacted law that its authors say is designed to protect California workers. Elliott argues that Instacart's grocery delivery workers are not independent contractors as defined under California law and therefore are being stripped of employee benefits and rights.

In the ruling, which was issued Feb. 18, but not formally served to the parties until this week, Taylor agreed with the City Attorney's Office's assertion that Instacart would not be able to show its workers should be classified as independent contractors.

The judge cited a state Supreme Court ruling in the case of Dynamex Operations West Inc. v Superior Court, which outlines an "ABC" test for determining whether a worker is an employee, a classification that applies if the person performs a core function of the business, is not free from its control, or is not engaged in an independently established trade, occupation or business. The "test" is referred to in the text of AB 5.

Taylor wrote that Instacart would likely be unable to satisfy any of the test's three conditions.
The judge also wrote that the city's litigation against Instacart was in line with other recent, related decisions, including the recent passage of AB 5, which gives greater labor protections to workers classified as employees.

"The policy of California is unapologetically pro-employee (in the several senses of that word). Dynamex is explicitly in line with this policy," Taylor wrote.

Although he said there is room for debate on the wisdom of AB 5, and while other states have chosen another course, the law is the law.

"The Supreme Court announced Dynamex two years ago. The decision gave rise to a long debate in the legal press and in the legislature. The legislature passed AB 5 last fall. The governor signed it. To put it in the vernacular, the handwriting is on the wall," Taylor wrote.

Instacart plans to appeal the decision, which the company said would not affect its operations in San Diego, due to a temporary stay of enforcement during the appeals process.

"We disagree with the judge's decision to grant a preliminary injunction against Instacart in San Diego," Instacart said in an emailed statement. "We're in compliance with the law and will continue to defend ourselves in this litigation. We are appealing this decision in an effort to protect shoppers, customers and retail partners. The court has temporarily stayed the enforcement of the injunction and we will be taking steps to keep that stay in place during the appeals process so that Instacart's service will not be disrupted in San Diego."

Elliott's office touted the ruling as a victory for worker protections.

"This landmark ruling makes clear that Instacart employees have been misclassified as independent contractors, resulting in their being denied worker protections in which they are entitled by state law. We invite Instacart to work with us to craft a meaningful and fair solution" Elliott said.

"This decision is also a warning to other companies to do right by their employees. As the court said, 'The handwriting is on the wall.' California has had two years since the Supreme Court's Dynamex decision to distinguish between a contractor and an employee. Everyone, not just Instacart, must live up to their legal responsibilities; they cannot ignore the significance of what occurred here."

Although the San Diego case only applies to that city, it's unknown how an unsuccessful appeal by Instacart might impact its business in other parts of the state moving forward. It's unlikely any Riverside County jurisdictions would take action like San Diego, but the case could set a statewide precedent.

That said, at least one Southwest Riverside County lawmaker has shown her support for repealing AB 5 by co-authoring legislation that would gut the current law.

—City News Service contributed to this report.