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By Elias Schisgall

Instacart is suing to block a set of New York City laws that would set a minimum wage for the independent contractors who deliver its grocery orders.

The lawsuit against the city, filed Tuesday in the Southern District of New York, said the city lacks the legal authority to enact the laws, which would equalize grocery shoppers' pay with restaurant delivery drivers and impose certain requirements on tipping and recordkeeping.

Instacart, also known as Maplebear, said in its complaint that the laws - which take into account a shopper's "on-call time," when they are available but not actively completing an order - would force the company to put restrictive limits on how long shoppers can spend in the Instacart app. It could also lead to shoppers being removed from the platform if they fulfill too few orders.

"Many shoppers will leave Instacart's platform, given that the freedom to work on their own terms would vanish," the company wrote in the lawsuit. "Customers will see higher fees, fewer options, and worse service as a consequence of fewer shoppers and a less flexible structure."

Instacart added that the laws would create burdensome recordkeeping and reporting requirements for the company and take away consumer choice by regulating how Instacart displays tipping options for users.

It said the municipal laws are preempted by New York State's minimum pay laws and guidelines for freelance workers, and that they would regulate interstate commerce in violation of the U.S. Constitution, citing Instacart's status as an out-of-state business.

Instacart also alleges that the laws improperly delegate authority to New York's Department of Consumer and Worker Protection in violation of the New York City Charter.

The company is requesting declaratory and injunctive relief.

New York's Department of Consumer and Worker Protection, which is named as a defendant in the lawsuit, said in a statement that it was disappointed by Instacart's reaction to the laws.

"Instacart shoppers are currently paid just $13 per hour, with no benefits, no pay for waiting time, and no reimbursement for vehicle expenses," a spokesperson for the agency wrote. "No business in New York could legally compensate employees at such a low level. These workers deserve better."

This is not the first time New York City has sparred with delivery platforms over its efforts to boost wages for delivery workers. DoorDash, Uber Eats, and Grubhub all filed lawsuits against the city in 2023 to block a minimum-wage law for food delivery drivers.

Those suits were later settled, according to Instacart's complaint.

Write to Elias Schisgall at elias.schisgall@wsj.com

By Angela Palumbo

Shares of Instacart parent Maplebear were falling Tuesday after e-commerce giant Amazon.com announced that it will be launching "ultra-fast" delivery services in two cities.

Amazon said in a news release Monday night that it is testing 30 minute or less delivery on thousands of different household essential items and groceries in parts of Seattle and Philadelphia through what has been dubbed "Amazon Now."

Prime members will pay $3.99 per ultrafast order, while non Prime members will be charged $13.99.

"While this offering is in early test mode, we think Amazon Now is potentially an important step toward Amazon matching or even surpassing the immediacy benefit of in-store purchasing," BofA Securities analyst Justin Post wrote in a note on Tuesday. He rates Amazon as a Buy with a $303 price target.

Amazon stock was trading up 0.4% to $234.87 on Tuesday afternoon.

The expansion of Amazon's same-day delivery, especially with food and grocery items, puts competitive pressure on companies like Instacart. Shares of Maplebear — the parent of Instacart — dropped 3.7% to $41.19 on Tuesday.

Amazon is known for getting packages to customers quickly, but the company has been looking to make its delivery process even quicker.

Amazon launched its Prime Now same day service in 2014, but then integrated that service into the Amazon app and website in 2021. Amazon has also launched delivery drones that are designed to deliver packages weighing five pounds or less in under 60 minutes.

The company recently expanded its same-day perishable grocery delivery services, and said in August that it planned on expanding that capability to over 2,300 areas across the U.S. by the end of 2025.

"We view Monday's announcement as a pivotal step forward in Amazon's broader strategy to capture incremental share in the category," Wedbush analyst Scott Devitt wrote in a note on Monday.

"The introduction of a more competitive grocery delivery offering could diminish the appeal of intermediaries and pressure Instacart's business, " Devitt added. He rates Mapelbear as Underperform with a $36 price target.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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