A lawsuit brought by the District of Columbia’s top law enforcement officer against grocery delivery provider Instacart has been settled, according to a Friday press release. The company will pay $2.54 million to resolve allegations that ” the company misled DC consumers, used tips left for workers to boost the company’s bottom line, and failed to pay required sales taxes.”
The original lawsuit alleged that Instacart led consumers to believe that “service fees” collected by the company while placing an order were tips that would go to drivers that pick up and deliver groceries; instead, D.C. Attorney Karl Racine’s lawsuit claims, the fees went to the company.
“DC consumers expect their tips to go to workers—not the c-suite,” said Racine in the release. “Any business operating in the District must provide consumers with truthful information, pay workers the wages and tips they have earned, and pay the sales taxes that they owe. Today’s settlement with Instacart sends a clear message: any company that attempts to dodge their obligations to workers and consumers will be held accountable.”
According to the press release, $1,8 million will be paid to the District, and an additional $739,057 will be paid in taxes, alongside an acknowledgement that Instacart must pay D.C. sales tax. The settlement will also require that tips go to workers.
Instacart was represented by Orrick Herrington & Sutcliffe.