Instacart CEO Fidji Simo defended the company’s independent contractor business model on Wednesday, saying the flexible working hours the company offers is an important resource for moms who need to earn money. .
About 70% of the grocery delivery company’s contract workers are women, and half of them are mothers, Simo said in a talk at… Fortune’s The Most Powerful Women Summit in Laguna Niguel, Calif. For moms with limited traditional, full-time or part-time capacity, being able to control their own schedule is important, she says.
“The idea that they can open an app and go to work, say for an hour, three hours, or on a weekend and really fit into their schedule is a really important value that we bring. give back to these people and help them make money,” said Simo in an on-stage conversation with Luck Senior writer Maria Aspan.
Instacart and other so-called gig economy companies like Uber and Lyft, has faced criticism for classifying workers as independent contractors rather than full-time employees. At Instacart, these employees act as “shoppers” who roam the supermarket and pub aisles, fulfill orders online and then deliver the goods to customers’ homes. In 2020, Instacart employed about 550,000 contract-based shoppers.
“We don’t end up classifying independent contractors as full-time employees, because 80 percent of them tell us that’s absolutely not what they want,” said Simo.
Simo takes over as CEO of Instacart in August 2021 and this is her first foray into a gig economy-based company. She spent the previous 10 years of her career at Facebook — transitioning from product marketer to head Facebook app before leaving in July 2021. Prior to that, she led strategy at eBay.
Simo continued to tell her mother about Instacart’s plan to go public. The company, which has seen its private market valuation drop from $39 billion to $24 billion amid last 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 Information.
During the talk, Simo described the potential of Instacart technology to serve as a broader platform for businesses offering home delivery. “Instacart, as a company, has the opportunity to be the technology pillar for the entire industry.”
The question of whether contract economy workers should be classified as independent contractors or regular employees is still being raised, given factors such as the degree of control that individual workers have in their employment. Their day-to-day performance is at the heart of debate among companies, labor advocates, courts and regulatory bodies. On Tuesday, US Department of Labor proposes new federal rules that would make it harder for companies to classify workers as contractors, giving them more rights like overtime and minimum wages.
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 does not acknowledge any wrongdoing in the agreement, which will provide affected workers with reimbursement for gas, auto repair, cell phone and other expenses related to Instacart.
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