(Instacart Photo)

The Seattle City Council is once again embroiled in a legal dispute with a gig economy company over efforts to provide labor protections to the workers that power the industry.

Instacart filed a lawsuit Friday over a new Seattle ordinance that would force the grocery delivery company and others like it to give drivers premium pay during the pandemic.

The complaint, first spotted by the Seattle news blog SCC Insight, claims the ordinance violates state and federal law by implementing a fee on a specific business category and establishing illegal parameters on contracts between Instacart, its drivers, and customers.

The law, passed earlier this month, requires food delivery companies to pay drivers $2.50 per delivery on top of their regular rates. The hazard pay is intended to offset the costs and risks that drivers are dealing with during the pandemic, like acquiring protective gear and cleaning vehicles between trips. Instacart says it already provides unlimited access to those supplies for its delivery drivers.

The premium pay mandate remains in effect for the duration of the state of emergency declared in March due to COVID-19. The law will be automatically repealed three years after the civil emergency ends if the City Council doesn’t take action on it before that time. Instacart’s primary objection to the law is the three-year duration, which the company says forces it to “unsustainably subsidize service in Seattle for years to come.”

The legislation prohibits grocery delivery companies from passing on premium pay costs to customers. It also forbids the platforms from reducing worker compensation or service areas within the city.

The Washington Food Industry Association, an organization representing grocery stores and delivery businesses, joined Instacart in the lawsuit. They claim Seattle “makes unprecedented intrusions into a business’s most fundamental management decisions.”

“This legislation also exceeds the City’s jurisdiction by attempting to commandeer private businesses, forcing them to essentially operate as public utilities for three years after the civil emergency ends,” an Instacart spokesperson said in a statement. “Today, we’re joining the Washington Food Industry Association to challenge this ordinance in court to protect Seattle’s residents, shoppers, and grocers from this misguided legislation.”

Seattle City Council member Lisa Herbold, a sponsor of the ordinance, accused Instacart of putting profits above workers in a statement to GeekWire.

“Instacart would choose to let their drivers suffer during this pandemic instead of voluntarily supporting them,” she said.

The lawsuit claims Seattle’s law is in violation of a 2018 Washington ballot measure that forbids local jurisdictions from passing taxes and fees on groceries. But that could be difficult for Instacart to prove in court because Seattle’s ordinance requires the company to provide payouts to drivers, not to the city.

The complaint also claims the ordinance violates federal equal protection by singling out delivery network companies. The plaintiffs are asking a judge in King County Superior Court to invalidate the ordinance and block the city from enforcing it.

Working Washington, an organization that advocates for gig workers and backed Seattle’s ordinance, issued a statement condemning the lawsuit.

“It must have been pretty expensive to pay a bunch of lawyers to dream up these absurd arguments but apparently the company has money to burn … meanwhile, the people taking on the risk of essential work during a global pandemic are getting paid less than the minimum wage after expenses,” a Working Washington spokesperson said. “That’s why hazard pay is popular, necessary, appropriate, perfectly legal, and bound to expand from Seattle across the country.”

Demand for Instacart’s service has increased more than 300% year-over-year as the pandemic has caused many customers to avoid traditional grocery shopping. Instacart is hiring thousands of new employees and shoppers to keep up with demand, TechCrunch reports. The company just raised an additional $225 million in funding earlier this month, valuing it at nearly $14 billion as it battles Walmart, Amazon, Kroger, and others.

Read the complaint below:

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