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Seattle Passes Gig Worker Wage Boost Despite Business Pushback

June 1, 2022, 12:51 PM

The Seattle City Council passed a measure creating new benefits for gig workers in the city, becoming the latest local government to boost protections for workers who don’t have employment status.

The council voted unanimously Tuesday to pass the legislation—touted by worker groups as first-of-its-kind in the country—that provides a pay floor and increased flexibility for workers for companies including DoorDash, Inc., AmazonFlex, and Grubhub, Inc., but also retains their status as independent contractors. The measure will take effect in 18 months.

“We live in an expensive city and these workers make below the minimum wage,” said Seattle City Council member Lisa Herbold, the bill’s sponsor. If app-based companies must pay their workers a subminimum wage to sustain their model, “there should be a reconsideration if that model works,” she added.

Workers on both sides of the debate testified before the panel, saying they feared the negative consequences of the legislation and also that they wanted to be able to earn a living wage from the work. Representatives from Shipt, DoorDash, and Instacart argued for more study on the impact of the bill, and more analysis to ensure it wouldn’t hurt the workers or the consumers and businesses that work with them.

“As drafted, the measure risks the economic security and a crucial source of earning opportunities for these workers,” said Justin Hyer, director of state and local government affairs at Shipt. “This is being considered without studying the impacts and real possibility that it diminishes earning ability.”

Gig companies base their business models on labeling workers as contractors, rather than employees. The companies argue the status guarantees worker flexibility, but drivers say they don’t get the benefits of employment, such as a minimum wage, overtime, and health care. Some gig companies in other cities and states have supported compromises that allow their status to be cemented but provide some benefits of traditional employment.

Measure Passes

The Seattle bill covers gig workers for app-based companies with 250 or more contracted workers, including delivery drivers or workers affiliated with staffing apps such as Handy and Instawork. Uber Technologies Inc. and Lyft Inc. are covered by existing city and state policy, and so wouldn’t fall under the new bill.

Seattle’s minimum wage is $17.27 an hour. But a recent report by Working Washington, an advocacy group backing the bill, found gig workers in the city average under $10 an hour after expenses.

The measure guarantees a “pay floor” that ensures each job pays at least the minimum wage, after expenses, and not including a tip. The per-minute minimum is based on the city’s hourly minimum wage, considering “engaged time” working transporting passengers, and expenses.

Under the measure, gig companies are barred from penalizing workers based on the jobs they choose to reject, or which hours they’re available for work. Gig workers also will have the right to up-front information about pay, tip, and details of the job.

“Marketplace” apps such as TaskRabbit and Rover were excluded from the measure’s coverage after a committee struck protections for workers with app-based companies that connect consumers to businesses on their platform, according to Working Washington. An amendment during council was passed that requires the city council to consider a solution for these companies by August 2023.

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editor responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com