Seattle Enacts First-of-Its-Kind Ordinance to Provide Minimum Wage and Other Protections for App-Based Delivery Workers

On June 13, 2022, Seattle Mayor Bruce Harrell signed into law CB 120294, a measure intended to ensure app-based delivery drivers are paid a minimum wage plus tips and compensation for expenses, increase transparency related to offers for work, and preserve worker flexibility. The App-Based Worker Minimum Payment Ordinance is part of a collection of six legislative proposals known as “PayUp,” and it is the first in the policy package to pass.

Taking effect in 2023, the ordinance covers “network companies” with 250 or more app-based workers worldwide and applies to on-demand app-based delivery drivers. The law does not apply to “marketplace workers,” who preschedule and negotiate rates for their orders, or to transportation network rideshare drivers, who are already covered under a separate chapter of the Seattle Municipal Code and a recently enacted Washington state law.

Minimum Payment

The ordinance regulates pay for app-based workers’ “engaged time” in the city of Seattle. This includes time for services that begin in Seattle—regardless of where the service terminates—or time for the portion of services occurring within Seattle, if the service begins outside Seattle city limits. The law ensures that the drivers—who are independent contractors—are paid a “minimum wage equivalent rate” and receive the Internal Revenue Service’s (IRS) standard mileage reimbursement.

The required minimum payment must be the greater of (a) an amount calculated using a formula combining per-minute and per-mile amounts ($0.38 per minute and $0.64 per mile for 2022) multiplied by the number of engaged minutes and miles, respectively, or (b) a per-offer amount of at least $5.00 per offer.

An “offer” is defined in the ordinance as “one or more online order presented to an app-based worker as one opportunity to perform services for compensation that the app-based worker may accept or reject.” Cost, time, and mileage factors will be adjusted over time.

Tips and gratuities must be paid to the app-based workers and do not count toward the “minimum network company payment,” the guaranteed minimum amount the network company must pay for an offer, incentives, or any other compensation for services required to be paid to the workers.

Transparency

The ordinance requires network companies to provide—“and/or ensure a customer provides”—app-based workers with information needed to make informed choices about which offers to accept and to verify compliance with minimum payment requirements. When facilitating or presenting an offer, the information that must be provided to an app-based worker includes:

• a reasonable estimate of the engaged time and miles to complete the offer and approximate geographic location where work will occur;
• the guaranteed minimum amount the network company will pay for the offer;
• the tip amount customers have indicated they will provide, if customers are able to specify tips in advance;
• the names of business establishments for required stops; and,
• as reasonably ascertainable, information about the physical labor required to perform the offer, accessibility of required locations, and contents of certain orders.

With respect to verifying compliance with minimum payment requirements, the ordinance provides that within twenty-four hours of performance of each offer, or within seventy-two hours of an app-based worker’s cancellation, a network company must transmit an electronic receipt containing specific information about each offer. Each week, network companies must provide written notice with specific information about the offers performed or cancelled with cause, as well as other weekly engagement with the platform.

In addition, network companies must provide Seattle’s Office of Labor Standards with regular and routine access to certain company records to administer and enforce the ordinance’s provisions.

The ordinance also provides customers with information regarding the nature of charges, including amounts paid to workers and retained by the company via a required electronic receipt within twenty-four hours of performance or cancellation.

Flexibility Protections

The ordinance also includes provisions that aim to protect workers’ flexibility, including the right to freely choose jobs and hours without adverse action, while maintaining the network companies’ ability to service customers and third-party businesses.

What’s Next for Network Companies With Seattle Workers

Future additional legislation in the PayUp package will focus on providing assistance to app-based workers related to restroom access, antidiscrimination policies, background checks, deactivation protection, and a gig-worker advisory board for the City of Seattle.

Ogletree Deakins’ Seattle office and will continue to monitor and report on developments with respect to the PayUp legislation and will post updates to the firm’s Washington blog as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.