Nelson Bill Would Eliminate Minimum Wage for "Gig" Drivers—and Slashes Workers' Rights

The Doordash-approved proposal also ties the Office of Labor Standards' hands and takes away workers' right to sue.

By Erica C. Barnett

Gig delivery workers and their allies were bracing for legislation by City Council President Sara Nelson to repeal minimum wage legislation passed last year, known as the PayUp law. What they may not have expected was how far Nelson's proposal would go to roll back reforms unrelated to wages, including protections against deactivation, transparency requirements, and legal rights for delivery workers to sue if their employer violates the law.

The new minimum wage, which works out to around $26 an hour, was intended to offset many of the employer-side costs drivers must bear because they're classified as "independent contractors," including workers' comp insurance, employer payroll taxes, unemployment insurance, family and medical leave insurance, and gas, maintenance, and other costs associated with driving for a living.

The PayUp legislation also ensured that drivers would be paid for rest breaks and time spent doing work other than actively driving—costs that an employer would have to pay if the workers were traditional employees. And it made it harder for the companies to deactivate or otherwise penalize workers for doing things the companies don't like, like going offline during periods of high demand. 

Delivery companies, including Uber and Doordash, claimed that paying for these expenses would make it impossible for them to turn a profit, and imposed a $5 fee on every delivery order, instantly driving down demand for drivers' services and leaving many in desperate straits. Nelson and other allies of the delivery companies now argue that rolling back the minimum wage is the only way to eliminate the fees and get Seattle residents ordering again—a claim workers dispute, noting that the apps haven't provided financial data to back up their pleas of poverty.

"[I’]ts not our role to question the basis for a business decision nor do we have the authority to prohibit it," Nelson wrote in her newsletter this week. "And it’s tone-deaf because workers are struggling to pay rent and businesses are contemplating layoffs right now!

"My position is that this first-in-nation (and thus untested) legislation caused the problem and it's incumbent upon us to fix it in a way that will result in lower delivery costs so customers return to ordering at pre-implementation levels. That's the only thing that will reverse the unintended consequences I predicted from the get-go."

But Nelson—whose company, Fremont Brewing, just sold a majority share to a firm that also owns dozens of restaurants that deliver through DoorDash—has proposed legislation that would far beyond repealing the new minimum wage and "fix[ing] the unintended consequences" of the $5 fee the delivery companies imposed. The bill Nelson introduced this week would put far more power in the hands of delivery companies, and strip authority from the city to enforce its own labor laws.

But Nelson—whose company, Fremont Brewing, just sold a majority share to a firm that also owns dozens of restaurants that deliver through DoorDash—has proposed legislation that would far beyond repealing the new minimum wage. The bill Nelson introduced this week would put far more power in the hands of delivery companies, and strip authority from the city to enforce its own labor laws.

And, notably, it wouldn't require the app companies to stop charging the $5 fee or prohibit similar fees in the future, leaving open the possibility that every time the city attempts to regulate them, the apps could just impose fees large enough to grind their own business to a halt.

At the city council's regular meeting on Monday, most of the people who testified about the legislation were against it. One, a former driver for Uber and Lyft named Sandra, said she drove 10 to 12 hours a day, seven days a week, for years until she was deactivated without explanation last September. "There is no consistency in pay, and the apps treat workers as disposable," she said. "These apps like to pretend they're doing things that are in their workers' interests. ...  They are not. They just want to get out of paying a minimum wage."

In addition to eliminating the minimum wage for drivers, which worked out to about $26 an hour before expenses, Nelson's proposal would:

• Cut drivers' base per-mile payment from 64 to 35 cents a mile, less than half the federal rate for tax deductions;

• Eliminate a $5 minimum payment for each delivery offer; 

• Eliminate penalties (currently double pay plus $5,755) imposed on companies that fail to pay drivers;

• Deny workers the right to file a civil suit against delivery companies that withhold their wages or violate other rights guaranteed by the law;

• Remove transparency requirements that help workers decide whether to accept a delivery offer, including whether the delivery requires climbing stairs, what's in the delivery, and the amount of any tips provided in advance; 

• Reduce the amount of time workers have to decide whether to accept an order or lose it from two minutes to 45 seconds;

• Extend the amount of time companies have to inform workers how much they made on a delivery from 24 hours to 48;

• Prohibit the city's Office of Labor Standards—the only city agency that enforces local labor laws—from asking delivery companies for "the production of any record," including information that would help workers make informed decisions about which apps to work for, unless it's part of an enforcement action against a company;

• Bar OLS from adopting rules that "impose additional requirements" of any kind on delivery companies, in perpetuity;

• Require OLS to give the app companies 30 days (with an option for extensions) to correct most "non-willful" violations before taking any enforcement action;

• Remove a section prohibiting "adverse actions" by delivery companies that was intended to stop the companies from deactivating, threatening, penalizing, reducing or garnishing pay, or discriminating against workers because they won't take certain jobs or aren't available when the companies want them to be on the clock;

• Allow delivery companies to charge workers a $5 fee (adjusted by the rate of inflation every year) every time they take out their earnings before the end of the company's "pay period"—an ironic twist, given that the rest of the law insists drivers aren't employees.