Law Street Media

DC AG Sues Gig Delivery Service Shipt for Employee Misclassification and Labor Violations

Food delivery.

Male courier with bicycle delivered no name shopping bag to the client.Courier delivery food service at home

On Thursday, District of Columbia Attorney General Karl Racine filed suit against Shipt Inc. a delivery service company and Target Corporation subsidiary, for violations of several District labor laws, including minimum wage, overtime pay, and sick leave protections. The complaint alleges that Shipt misclassifies District residents as independent contractors to reduce labor costs despite the fact that its workers or “shoppers” have “all the hallmarks of employee status.”

Racine’s complaint, filed in the Superior Court of the District of Columbia, explains that Shipt is an Alabama corporation that provides consumers with shopping and delivery services with a focus on groceries and household merchandise. On its mobile app or website, customers buy things that shoppers purchase and deliver for them.

Reportedly, Shipt advertises to workers that they can be their own boss and work flexibly. After an initial vetting process and when shoppers sign up for a shift, they are matched with a customer order. Shipt then instructs them where to shop, which products to buy, and where to deliver. The defendant also uses an algorithm to determine shoppers’ per-order pay, the complaint notes.

Racine contends that “[t]he economic reality of Shipt’s relationship with its shoppers demonstrates the existence of an employer-employee relationship,” though the company classifies shoppers as independent contractors. 

In support, the filing points to Shipt’s power to hire and fire its workers as well as its extensive supervision and control over their conditions of employment and pay. In addition, the suit claims that Shipt trains and monitors shoppers, who are both economically dependent on Shipt and who perform work integral to the delivery company’s business.

“At every step of the way Shipt cheats, putting profits over workers and violating its employees’ basic rights just to make another dollar. We’re using all our authority to level the playing field and hold Shipt accountable for trying to cheat DC workers,” Racine said in a statement.

The filing states six counts for relief and seeks to recover unpaid wages and paid sick leave owed to Shipt’s employees, require Shipt to pay into the District’s public programs, and recover damages and penalties.

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