Instacart CEO says independent contractor status is vital for mothers who need to earn money

Instacart CEO Fidji Simo defended the company’s independent contractor business model on Wednesday, saying that the flexible hours it offered was an important resource for mothers who need to earn cash.

Roughly 70% of the grocery-delivery company’s gig workers are women, and half of them are mothers, Simo said during a talk at Fortune’s Most Powerful Women Summit in Laguna Niguel, Calif. For moms with limited availability to work traditional, full or part-time jobs, being able to control their own schedule is critical, she said. 

“The idea that they can open up an app and go to work, like for an hour, or for three hours or on the weekend, and really fit that into their schedule is a really important value that we bring to these people and help them earn money,” Simo said during an on-stage conversation with Fortune senior writer Maria Aspan. 

Instacart and other so-called gig-economy companies such as Uber and Lyft, have faced criticism for classifying workers as independent contractors rather than as full time employees. At Instacart, these workers act as “shoppers” who roam supermarket and liquor-story aisles, filling orders placed online and then delivering the goods to the customer’s doorstep. In 2020, Instacart employed some 550,000 contract-based shoppers.

“We don’t end up classifying independent contractors as full-time employees, because 80% of them told us that’s absolutely not what they want,” Simo said. 

Simo took over as Instacart’s chief executive in August 2021, and it’s her first foray into a gig economy-based company. She spent the previous 10 years of her career at Facebook—moving from roles as a product marketer to the head of the Facebook app before leaving in July 2021. Before that, she led strategy at eBay

Simo kept mum on the subject of Instacart’s plans to float shares to the public. The company, which has seen its private market valuation decline from $39 billion to $24 billion amid the past year’s market downturn, filed paperwork for an IPO in May. Since then, the company has laid off 3,000 workers and frozen hiring, according to a recent report in The Information.

During the talk, Simo described the potential for Instacart’s technology to serve as a broader platform for businesses to offer home deliveries. “Instacart, as a company, has the opportunity to be the technology backbone for the entire industry.”

The question of whether gig-economy workers should be classified as independent contractors or regular employees remains in flux, with factors such as how much control individual workers have to carry out their daily duties at the center of a debate between companies, labor advocates, courts, and regulators. On Tuesday, the U.S. Labor Department proposed new federal rules that would make it tougher for companies to classify workers as contractors, entitling them to more rights such as overtime and minimum wage.

Instacart recently agreed to pay $46.5 million to settle a 2019 lawsuit brought by the city of San Diego alleging that the company mislabeled 308,000 full-time workers as independent contractors. Instacart did not acknowledge any wrongdoing in the settlement, which will provide affected workers back pay for gas, auto repairs, cellphones and other Instacart-related expenditures.

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