City Council Bill Cutting "Gig" Delivery Workers' Pay Moves Forward
In addition to reducing "gig" companies' costs, the legislation strips away protections against retaliation and will give workers just 45 seconds to decide whether to accept delivery orders
By Erica C. Barnett
The Seattle City Council's governance and economic development committee approved a bill sponsored by Council President Sara Nelson that will lower the minimum wage for so-called "gig" delivery workers on Thursday, with Joy Hollingsworth abstaining because, as she put it, "I still want this bill to be baked more."
The 4-1 vote came after hours of testimony from delivery drivers who were overwhelmingly opposed to the legislation and have shown up at public comment periods for weeks on end to ask the council not to cut their wages. After last year's city council, including Nelson, voted for the "PayUp" bill that required gig companies to cover more of workers' costs, wages went up to an average of around $26 an hour. In response, the gig companies—Uber, Doordash, Instacart, and others— imposed a flat $5 fee on every order, causing demand for delivery service to plummet.
A handful of drivers, mostly representing the Uber-funded lobbying group Drive Forward, said the changes would enable the companies to drop the fees.
Several council members patted themselves on the back for listening to "all sides" of the issue before voting to approve a bill that satisfied almost all of the delivery companies' demands.
Nelson, for example, spent several minutes reading the February testimony of driver Heather Nielson, who said the fees had caused customers to "boycott the apps" and stop providing tips, into the record. Nielson, later featured on the conservative website The Center Square, said tips make up 90 percent or more of drivers' wages—a claim that many other drivers contradicted in their testimony.
Nelson seemed eager to ignore those workers' comments, referring to them dismissively as "all this noise we've been hearing."
Her legislation, she said, "is an effort to reverse the bad outcomes caused by a flawed law" that resulted in a "drastic reduction in worker wages and lost revenues for restaurants and other retail establishments. That's what happened. That was the chain of events. And all of this was anticipated but the last council did it anyway. And now we're faced with the fallout."
Councilmember Maritza Rivera recalled a time when, "as a young woman, I worked as a server in a fast food restaurant where I made the legal minimum wage and relied on tips to pay rent, utilities and groceries." In most states, restaurants can pay sub-minimum wages for tipped workers on the justification that workers make plenty of money from customers' tips, and companies like Doordash and Instacart adopted the practice in states where it's still legal until a series of lawsuits forced them to alter their policies. Washington state does not allow a "tip credit."
The legislation notably,, does not require companies to stop paying the $5 fee; nor does it impose any new restrictions on the companies' power over their workers, such as their ability to "deactivate" (fire) workers for any reason, including wanting to set their own work hours.
Instead, the bill reduces workers' pay and takes away some of the rights they currently have. First, the bill lowers the amount companies must pay their drivers for expenses, such as self-employment (employer) taxes and workers' compensation, that the drivers wouldn't have to pay if they were classified as employees.
Second, it slashes workers' reimbursement for direct expenses associated with driving and maintaining their delivery vehicles from 64 cents a mile to 35 cents—less than half the federal level set by the IRS. Sara Nelson, the bill's sponsor, justified this cut by saying that cars in Seattle are smaller and more efficient than the average vehicle, but failed to note that Seattle's gas prices are 30 percent higher than the national average—a huge daily cost that will now be borne more heavily by drivers, who described spending hundreds of dollars a month on gas alone.
The legislation would also eliminate penalties on companies that fail to pay their workers, strip the city's Office of Labor Standards of its authority to impose any new labor standards on the companies, and allow companies to pay workers a sub-minimum wage at certain times as long as drivers' wages work out, on average, to $19.97 an hour over a two-week "earnings period." It would also remove protections against retaliatory deactivation and reduce the amount of time workers have to decide whether to accept an order to just 45 seconds—another industry request.
Although gig workers are ostensibly just contractors, the gig companies pay them on a standard schedule; under Nelson's legislation, the companies will gain the right to charge workers $5 any time they need their money before two weeks have elapsed.
Two council members added provisions that slightly softened the harsh impact of the proposal. Councilmember Rob Saka sponsored an amendment to eliminate a provision from Nelson's bill that would have prohibited workers from suing when a gig company failed to pay them or otherwise violated the law, and Councilmember Bob Kettle softened a provision that gives the gig companies a 30-day "grace period" before the city can penalize them for breaking the law, limiting that provision to one year.
The full council will vote on (and presumably pass) the legislation at its meeting on May 28, Nelson said Thursday.