Instacart Sues Seattle Over Delivery-Worker Virus Pay Law (1)

June 29, 2020, 8:30 PM; Updated: June 29, 2020, 9:13 PM

Instacart and the Washington Food Industry Association launched a constitutional challenge to a newly-enacted Seattle ordinance requiring food delivery companies to provide premium pay to gig workers during the Covid-19 pandemic.

City Council Bill 119799 unlawfully burdens WFIA members like Instacart by increasing their operational costs and threatening their economic viability in Seattle, according to the complaint filed June 26 in the Washington Superior Court for King County.

Instacart joined the WFIA’s challenge “to protect Seattle’s residents, shoppers, and grocers from this misguided legislation,” which will force food delivery companies “to unsustainably subsidize service in Seattle for years to come,” a company spokesperson said Monday in a statement.

The Seattle City Attorney’s office plans to “investigate and respond to the claims,” spokesman Dan R. Nolte said Monday.

The ordinance, which was passed June 15 by the city council and signed June 26 by Mayor Jenny Durkan, will remain effective throughout the Covid-19 emergency declared by the mayor in early March. That order doesn’t currently have an end date.

Under the law, businesses must pay premium wages to all food delivery workers who are classified as independent contractors, but can’t offset these costs by modifying or suspending services in Seattle, limiting or reducing workers’ pay or earning capacity, or imposing additional customer fees, the lawsuit says. Failure to comply can trigger fines and penalties of nearly $22,000 per aggrieved worker.

While the law states that food-delivery workers are at a higher risk of contracting and spreading the virus, it doesn’t require them or their employers to take any additional safety precautions or articulate how the premium pay would reduce those risks, the lawsuit says. There’s also no findings that these wages are connected to personal protective equipment costs or that food-delivery workers are at a higher risk than other gig workers, like Uber and Lyft drivers.

Additionally, while the law states that the premium wages will help keep food-delivery workers’ incomes stable, they’re already earning significantly higher wages due to increased demand caused by Covid-19, the lawsuit says.

Moreover, the ordinance intentionally targets food delivery companies to help certain labor groups organize gig-economy workers, the lawsuit alleges.

This “unreasonable and illegal intrusion on private business” exceeds the scope of the City’s authority with regard to public health and safety, violates the U.S. Constitution’s equal protection guarantees, amounts to a taking under the federal and state constitutions, and contravenes Washington’s Keep Groceries Affordable Act, which was passed via ballot measure in 2018, the lawsuit says.

The lawsuit was filed by Instacart, which is legally registered as Maplebear Inc., and the WFIA, which represents independent grocery stores, supermarkets, convenience stores, and their suppliers.

Causes of Action: Violations of the Revised Code of Washington § 82.84.040, the Washington Constitution’s Eminent Domain section, the U.S. Constitution’s Fifth and 14th Amendments, and 42 U.S.C. § 1983.

Relief: Declaratory judgment; damages; injunctive relief; attorneys’ fees and costs; and other and further relief the court deems proper.

Attorneys: Orrick Herrington & Sutcliffe LLP represents Instacart and WFIA.

The case is Wash. Food Indus. Ass’n v. City of Seattle, Wash. Super. Ct., 6/26/20.

(Updated company response attribution)

To contact the reporter on this story: Kathleen Dailey at kdailey@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Meghashyam Mali at mmali@bloombergindustry.com

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