Instacart Inc. is changing a controversial policy on how it pays workers who pick and deliver grocery orders, after protests over a pay system instituted last fall.
The San Francisco-based startup said it would give workers the full tips from customers and stop docking parts of gratuity from fees Instacart pays them. It will also offer back pay.
The retreat illustrates a delicate balance gig-economy startups struggle to maintain between keeping prices low for customers and paying their workers fairly. Fees associated with orders through food delivery apps are often opaque. Small changes to policies can have outsize effects on how much workers take home.
Instacart made a change in November to its compensation system, in which the company sometimes reduces its contribution to a worker’s pay if the person receives a certain amount in tips. In January, workers organized a campaign against the new pay system. They said that under the new policy, some of the tips that customers gave through the Instacart app wouldn’t go directly to the worker but would instead be used to offset a $10 minimum payment per job guaranteed by Instacart. The issue was further highlighted by the story of an Instacart worker who was paid 80 cents by the company for a particular delivery.
In a blog post on Wednesday, Instacart Chief Executive Officer Apoorva Mehta wrote that the company will now always separate tips from compensation from the company. It also raised the guaranteed pay for some jobs and said it would retroactively pay its workers for the amounts that tips were used to offset job pay in the past.
“These changes were designed to increase transparency while also keeping pace with a rapidly evolving industry,” Mehta wrote. “In doing so, we’ve tried, in good faith, to balance those needs, but clearly we haven’t always gotten it right.”