[co-author: Stephanie Kozol]*
On September 26, 2025, Minnesota Attorney General (AG) Keith Ellison announced a $800,000 settlement with Shipt, Inc. (Shipt). The settlement resolves allegations that the company was misclassifying its workers (referred to as “Shoppers”) as independent contractors instead of employees.
In 2022, AG Ellison filed a lawsuit alleging that Shipt was misclassifying its workers to avoid providing various employment protections required under Minnesota law. These protections included state and local minimum wage, local sick and safe time, as well as overtime and state law protections guarantying employees the right to know what they will be paid in exchange for their work. The lawsuit also alleged that this misclassification prevented Shoppers from accessing state unemployment insurance and workers’ compensation benefits.
The lawsuit detailed the nine factors Minnesota uses to differentiate employees from independent contractors, concluding that Shoppers are employees because they are economically dependent on Shipt. Shipt is alleged to have “gain[ed] an unlawful competitive advantage over its competitors by circumventing the protections and benefits that Minnesota law requires employers to provide to their employees.”
The settlement agreement requires Shipt to pay $800,000 to Minnesota and take steps to improve Shoppers’ working conditions, informed by, “input from Shoppers themselves about the most common difficulties they face on the job” and include requirements for Shipt to provide an explanation and appeal process to Shoppers who have been “deactivated” from the Shipt Shopping App (i.e., can no longer work with Shipt). Shipt is required to continue providing occupational accident insurance to Shoppers and cannot deduct payments for those costs from their earnings. Additionally, Shoppers will be able to view weekly pay records, retain all tips or gratuities earned, and request forgiveness for customer ratings and late delivery.
Why It Matters
This settlement highlights Minnesota’s ongoing commitment to addressing worker misclassification. In 2023, AG Ellison established an Advisory Task Force to examine the effects of worker misclassification on individuals, businesses, and the broader public. He has also been outspoken about his commitment to, “hold employers accountable for misclassifying their workers.” Companies that utilize independent contractors should carefully review applicable state requirements for classification as independent contractors, as additional lawsuits or investigations into misclassification will likely follow.
*Senior Government Relations Manager
