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San Diego Closer to Win on Making Instacart Reclassify Workers

Feb. 14, 2020, 1:38 PM

Instacart will likely have to reclassify its full-time Shoppers as employees rather than independent contractors, after a state court judge issued a tentative ruling Friday morning granting San Diego’s request for a preliminary injunction.

The San Diego City Attorney put forth a “very plausible showing of improper classification under the ABC test,” the state’s newly-codified worker classification standard, and Instacart hasn’t fully shown that it would satisfy that test, San Diego Superior Court Judge Timothy B. Taylor said. Last week, the court declined to grant the City’s request for emergency injunctive relief. The parties are scheduled to appear at a hearing later Friday to argue the motion.

Instacart, a same-day grocery delivery company that partners with multiple supermarkets, employs approximately 130,000 “Shoppers” nationwide. Currently, Instacart classifies in-store only shoppers as part-time employees but classifies its full-service Shoppers, who shop for and deliver groceries, as independent contractors.

Yet the evidence strongly suggests that Instacart can’t satisfy at least one prong of the ABC test when it comes to full-time Shoppers, whereas San Diego can likely prove that they fulfill them all, the court said. Even establishing one is enough.

Under the ABC test, a worker must be classified as an employee if she performs a service within the employer’s normal course of business, isn’t free from the employer’s control or direction, and isn’t engaged in an independently established trade, occupation or business.

The California Supreme Court adopted the test in 2018’s Dynamex Operations West, Inc. v. Superior Court, and in 2019 Gov. Gavin Newsom signed into law Assembly Bill 5, which codifies and expands the ABC test to the state’s labor code. The law went into effect Jan. 1.

The balance of equities also tips in San Diego’s favor, the court said. California’s public policy is “unapologetically pro-employee,” and all three branches of its government have embraced the ABC test.

Instacart can’t “legitimately claim surprise” that it might have to adjust its current business model, the court said. Additionally, the evidence indicates that Instacart’s already begun to make changes to comply with AB 5, and taking a few more “relatively minor” steps will ensure compliance with the law and guarantee that Shoppers are “true free agents.”

The preliminary injunction order isn’t final, and is subject to modification or dissolution, the court noted.

The City Attorney sued Instacart, legally registered as Maplebear Inc., in September 2019, seeking restitution on behalf of its workers for alleged California unfair competition violations. Instacart’s motion to compel arbitration is pending.

Keker, Van Nest & Peters LLP represents Instacart. The Office of the San Diego City Attorney represents itself.

The case is California vs. Maplebear Inc., Cal. Super. Ct., No. 2019-00048731, 2/14/20.

To contact the reporters on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bloomberglaw.com; Kathleen Dailey at kdailey@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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