Some Shipt workers plan to walk out because of changed payment model

Shipt workers in metro areas across the country plan to "walk off" their grocery-delivery jobs on Wednesday after the company announced pay-structure changes that some say could dramatically reduce how much money they earn.

Shipt — which is owned by Minneapolis-based Target and handles its deliveries — said Monday that it e-mailed workers in about a dozen metro areas late last week to inform them of the new pay structure set to take effect Wednesday in cities including Denver, Chicago, Tampa and Portland.

The Twin Cities is not a test market. But Shipt has said it plans to eventually adopt the model in all of its markets in the coming months after it initially began testing the new structure in a handful of areas in January.

Shipt, like other delivery services such as Instacart and Amazon Prime, has seen a surge in business since the outbreak of the coronavirus in the U.S. as more customers avoid in-store shopping.

In early spring, Shipt added 70,000 new workers to keep up with demand at Target and the other stores for which it delivers. Workers are independent contractors like Uber or Lyft drivers.

For the first quarter of this year, Target sales fulfilled by Shipt were up more than 300%.

The new payment model is supposed to "better account for the actual effort it takes to complete and deliver orders," Shipt said on a website post.

"Our shoppers should be paid based on the effort that they are putting in," Shipt spokeswoman Molly Snyder said in an interview.

Customers aren't going to see a change in delivery costs, Snyder said.

But Willy Solis, a Shipt worker from the Dallas area, said he reached out to hundreds of other Shipt workers across the country who were working in initial test markets and were paid significantly less under the new system.

"Basically, they were devastated about how much money they were losing," Solis said.

People were seeing their total pay drop 25 to 50% without a clear sense of the formula that was being used to determine the pay ranges, Solis said.

That is why he has helped organize Wednesday's walk-off, when the workers will not accept orders.

Shipt's new payment structure takes into account factors such as estimated drive time, the number of items in the order and peak shopping windows to calculate pay. Shipt workers are now paid on a model that is based mostly on a percentage of the total cost of the retail order.

Under the new system, Shipt said workers would be paid more if the order total was the same but had more items to collect. The algorithm also takes into account delivery during rush hour as opposed to a shorter drive time in off-peak hours.

Shipt does not publicly share its exact payment formula, but the delivery company said compensation varies by metro area.

The problem for Solis and others is that they don't know how much each element of their pay is being weighed, lessening transparency. In March, Solis drove to the San Antonio area, where the new payment structure was already being tested, and fulfilled some orders to see for himself how significant the pay drop would be.

"Sure enough, I took some orders and in taking those orders I saw the pay difference," Solis said.

Shipt said there had been some reports of low pay ranges in markets where the company has initially tested the updated pay model, but they were the result of a "technical issue" that has been fixed.

It's hard to tell how many Shipt workers in the Twin Cities will participate in Wednesday's walk-off. A Facebook group for local Shipt workers showed only a handful discussing the changes, with posters emphasizing that the changes would not happen in Minnesota yet.

In April, Shipt workers staged another walk-off to demand hazard pay and more immediate access to face masks and other protective gear. Some shoppers also participated in a second walk-off on May Day. Shipt gave out bonuses in early April and early May to its most active shoppers.

Staff writer Liz Sawyer contributed to this report.

Nicole Norfleet • 612-673-4495 Twitter: @nicolenorfleet