Overview
- Parties: Minnesota Attorney General Keith Ellison and Shipt, Inc.
- Settlement Amount: $800,000
- Issue: Alleged misclassification of Shipt “Shoppers” as independent contractors rather than employees.
Background
In 2022, AG Ellison filed a lawsuit alleging that Shipt misclassified workers to avoid providing:
- State and local minimum wage
- Sick and safe time
- Overtime pay
- Pay transparency protections under Minnesota law
- The misclassification also allegedly denied workers access to:
- Unemployment insurance
- Workers’ compensation benefits
- The AG’s office applied Minnesota’s nine-factor test for determining employment status, concluding that Shoppers were employees due to economic dependence on Shipt.
- The complaint stated that Shipt gained an unlawful competitive advantage by avoiding legally required benefits and protections.
Settlement Terms
Shipt agreed to:
- Pay $800,000 to the State of Minnesota.
- Improve Shopper working conditions, informed by Shopper feedback.
- Implement a clear explanation and appeal process for Shoppers who are deactivated from the app.
- Continue providing occupational accident insurance (at Shipt’s expense).
- Allow Shoppers to:
- View weekly pay records
- Retain all tips and gratuities
- Request forgiveness for low customer ratings or late deliveries
Why It Matters
- The case underscores Minnesota’s strong stance on worker misclassification.
- AG Ellison previously created an Advisory Task Force to study the effects of misclassification on workers and businesses.
- Ellison has stated his intent to “hold employers accountable” for misclassifying workers.
- Companies that engage independent contractors should:
- Review state-specific classification laws
- Assess potential compliance risks
- Prepare for increased enforcement actions and investigations in Minnesota and beyond
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