In July 2025, Instacart publicly opposed a New York City Council bill (No. 1135-A) to regulate third-party grocery delivery services, arguing that it would raise prices and hurt ordinary New Yorkers. That same month, Instacart received a notice from the NYC Office of the Clerk, which stated that Instacart had been selected for a “random” audit of its lobbying expenses. The notice directed Instacart to produce invoices, payroll registers, and other related documents. Is this a coincidence?
In late August 2025, Instacart submitted a Freedom of Information Law (FOIL) request seeking records related to the City’s decision to audit Instacart after the company opposed Int. No. 1135-A. Among other things, the request sought communications among several City agencies regarding the audit and its relationship to Instacart’s public advocacy.
The City’s response to the FOIL included only five documents. The City conceded that there were also other responsive records but stated that it was withholding those records. The City did not say what records it was withholding, which exemption applied to which records, or why the exemptions applied. Instead, it merely cited the exemptions and closed the request. Instacart appealed the decision, and the appeal was denied.
On December 2, 2025, Instacart filed a lawsuit against the City of New York in federal court under its publicly traded name, Maplebear. The lawsuit primarily targets Local Law 124, which seeks to apply the same minimum pay standards for restaurant delivery workers to grocery delivery workers, and Local Law 107, which dictates tipping options for consumers. Other laws regarding record-keeping and disclosures are also being challenged. The laws are set to take effect on January 26, 2026, but Instacart is seeking an injunction to prevent their enforcement while the legal challenge proceeds.
On December 3, 2025, Instacart filed an Article 78 proceeding against the City of New York in New York State Court, seeking an order compelling the City to turn over the records it requested via FOIL.
FOIL reflects a broad public policy favoring open government. It presumes that all public records are open to inspection and requires the person resisting disclosure to prove that the records are exempt. It requires that this proof be specific: An agency must show that a concrete exemption applies to specific records. It also forbids the agency from relying on conclusory, unreasoned assertions. The agency must explain persuasively that a specific record is covered by a specific exemption. If the agency fails to do that, the records must be disclosed.
I reviewed the court record, and the City came nowhere close to carrying its burden. It identified no specific record being withheld. It cited no statute justifying nondisclosure. It pointed to no facts supporting its decision to withhold. And it offered no analysis showing that any exemption applied to any record. Instead, it merely cited two FOIL exemptions, asserted that the exemptions applied, and closed the request.
That response was deficient as the City cannot claim a blanket exemption for requested records without specifying which records it is withholding, which exemption applies, and why the exemption applies. If the City fails to provide that information, a requester has no way to understand, much less challenge, the City’s exemption decision. The administrative process then becomes an empty exercise.
So why does this all matter to the For-Hire Vehicle (FHV) industry? Instacart’s battle mirrors similar legal battles Uber and Lyft faced over driver classification and pay rules. It also highlights a broader trend of government intervention in the gig economy to ensure fair pay and worker rights.
Companies in the gig economy, like Uber/Lyft and Instacart, argue that flexibility is key, and local regulations disrupt their model, increase costs, and benefit competitors. Regulators argue that these companies exploit workers by denying minimum wage, overtime, and benefits, hurting workers and public funds (taxes). In essence, both Instacart and Uber are fighting similar battles against local governments trying to regulate gig worker pay and status, while also facing federal scrutiny over consumer practices, highlighting a national debate over app-based work.
The NYC Department of Consumer and Worker Protection (DCWP) argues that Instacart workers currently make around $13 per hour with no benefits or pay for waiting time, which is below the legal minimum for employees. The new laws aim to establish a minimum pay rate similar to the $21.44 per hour rate for restaurant delivery workers.
Instacart argues that the laws are preempted by federal and state law and the U.S. Constitution. It claims that grocery and restaurant deliveries are fundamentally different and that the new regulations will degrade the flexibility workers value, increase delivery costs for consumers, and force the company to restructure its business model in the city, potentially eliminating jobs. The core issue is whether gig workers are independent contractors or employees.
These governmental regulations may seem to be a good thing as they protect workers, but there is another side to the coin. Over the years, New York City government regulations in the FHV industry have significantly expanded and have had an adverse impact upon the FHV industry. Mandating minimum driver pay, imposing a cap on new vehicle licenses, and introducing various surcharges has led to higher fares for riders, changes in driver availability, and company operations. Increased operating costs have to at least be partially passed on to riders through higher fares. Higher prices, driven by the cumulative effect of regulations, have led to increased price sensitivity among riders, resulting in fewer trips and slower market growth in NYC.
The question of whether government regulations or a free market is “better” is a long-standing debate in economics, and the prevailing view in most modern economies is that a mixed economy with a balance of both is most effective. Advocates for government regulations emphasize the need for consumer, worker, and environmental protections that the free market might neglect in the pursuit of profit. Proponents of the free market argue that the lack of excessive regulation fosters greater innovation, efficiency, and lower prices through competition.
In my opinion, competition pushes prices down and expands the variety of goods and services available, allowing supply and demand to determine value. On the other hand, government bureaucracy creates inefficiency. Too much “red tape” stifles economic growth, creates barriers for small businesses, and slows down progress.
Essentially, New York City considers Uber and Lyft drivers more like employees. The city aims to do the same for Instacart’s delivery workers. Instacart warns that if the laws pass, they might limit shopping hours, reduce the number of available shoppers, and raise the requirements for accepting orders. The result of Instacart’s lawsuit will decide the future of these worker-focused rules in New York City.
In short, Instacart’s case over NYC’s pay and tipping rules is similar to Uber’s prior regulatory fights because both hinge on where government authority ends in regulating app-based platforms, and both use preemption, flexibility, and consumer‑harm arguments to push back on local attempts to reshape gig‑work standards. These arguments did not work for Uber. They are unlikely to work for Instacart either. It looks like another industry is going down the rabbit hole of intense and invasive local government regulations.
