Just How Much is the Labor Department Proposal Threatening Food Delivery?
October 12, 2022

A federal proposal that could reclassify many independent contractors—including third-party grocery delivery drivers—as employees could threaten the business models of companies like Instacart, DoorDash and Uber Eats.

The U.S. Department of Labor on Tuesday unveiled a proposal that would be used to determine whether a worker is an independent contractor or an employee under the Fair Labor Standards Act. Employees are guaranteed a minimum wage and other benefits that don’t legally extend to contractors.

Since then, third-party food delivery has grown exponentially, aided by the pandemic and consumers’ shift to more online ordering. As delivery companies have grown, so has the pool of independent contractors who can download an app to start delivering food in their cars or on bikes.

Looking forward, this new proposal makes it clear that laws regarding independent contractors may be changing. If the proposal does ultimately reclassify grocery drivers and other food delivery workers as employees, companies like Instacart may have to raise pay or cut hours for these drivers, which could potentially result in higher prices for customers.

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