Human cloud, food-delivery firm Instacart likely misclassifies its workers as independent contractors under California law, a San Diego County judge ruled in a suit brought by the San Diego City Attorney.
Judge Timothy Taylor approved a preliminary injunction against Instacart, saying its independent contractor shoppers would likely not meet the ABC test for misclassification. Instacart said it would appeal, and that its service will not be disrupted in San Diego.
Taylor’s preliminary injunction is also not final. It only represents a discretionary decision “whether defendant should be restrained from exercising a claimed right pending trial,” according to the ruling.
The San Diego City Attorney sued Instacart in the wake of the 2018 Dynamex decision by the California Supreme Court that put in place the tough ABC test for determining independent contractor misclassification. The state legislature last year passed a law codifying the ABC test, known as AB 5, which went into effect Jan. 1.
“This landmark ruling makes clear that Instacart employees have been misclassified as independent contractors, resulting in their being denied worker protections to which they are entitled by state law,” City Attorney Mara Elliott said in a statement. “We invite Instacart to work with us to craft a meaningful and fair solution.”
Elliott also said the decision serves as a warning to other companies.
“California has had two years since the Supreme Court’s Dynamex decision to distinguish between a contractor and an employee,” she said. “Everyone, not just Instacart, must live up to their legal responsibilities; they cannot ignore the significance of what occurred here.”
Instacart plans to appeal the decision and said the preliminary injunction has been stayed at this time.
“We disagree with the judge’s decision to grant a preliminary injunction against Instacart in San Diego,” the company said in a statement to Staffing Industry Analysts. “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.”
Instacart service in San Diego will continue at this time.
“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,” according to Instacart’s statement.
In his ruling, Taylor said California’s policy is unapologetically pro-employee, and the Dynamex decision is in-line with that policy.
“While there is room for debate on the wisdom of this policy, and while other states have chosen another course, it is noteworthy that all three branches of California have now spoken on this issue,” Taylor wrote. “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.”
On the other hand, Taylor also said this is a lively area of the law with numerous cases pending and an effort underway to bring the question of driver misclassification to the state’s voters.
“Frankly, the sooner the Court of Appeal can hold forth on these issues, the sooner the parties will have a clear and definite signal of what is expected of them,” Taylor wrote.
Separately, others have also called for greater clarification of the law. And earlier this month, a federal judge denied a request from Uber Technologies Inc., Postmates Inc. and two drivers for a preliminary injunction to prohibit enforcement of AB 5.
Groups in New York and New Jersey are fighting efforts to put similar legislation in place in those states.