Seattle nears passage of nation’s first minimum wage for app-based, delivery gig-workers

May 26, 2022, 2:09 PM
(Flickr Creative Commons/ Ajay Suresh)
(Flickr Creative Commons/ Ajay Suresh)

Seattle verges on passing a first-of-its-kind minimum wage protection for app-based service workers.

Seattle mulls first-of-its-kind minimum wage for app-based delivery drivers

To do that, it faces the challenge of regulating a labor market that claims to not have traditional employees.  Companies like DoorDash and Instacart, instead, tout their relationship with independent contractors.

The legislation, dubbed “PayUp,” attempts a solution by requiring the equivalent of minimum wage for a combination of both “engaged time,” which starts as soon as an offer is accepted, and “engaged miles,” which ensures a baseline wage for miles driven.

The problem is that not all of the companies that fall under PayUp’s original scope have a business model that slot neatly into those categories.

The legislation defines app-based service providers as “network companies.” From there, it differentiates “on-demand networks,” like DoorDash, from “marketplace networks,” those that offer pre-scheduled services and do not use the “engaged miles” aspect of the minimum wage equation. They also allow their contractors to set their own rates.

PayUp, as passed out of a Seattle City Council committee Tuesday, excludes marketplace networks, services that primarily let customers pre-book appointments. It only applies to on-demand services.

Councilmember Alex Pedersen, with support from Sara Nelson and Andrew Lewis, successfully narrowed the scope of the legislation: they redefined the excluded marketplace networks as those app-based companies that “primarily” provide on-demand services, as opposed to, as originally drafted, companies that “exclusively” provide on-demand services. It also expands the definition of marketplace networks to include geo-tracking of their contractors in their model.

“I want to make sure we’re being very careful not to stifle innovation and flexibility, benefits to consumers, workers, and small local businesses,” Pedersen said.

“I support a minimum wage for gig workers who have no say in their wages. At the same time, marketplace network companies who provide their brand, their customer base, or application technology to workers who actually set their own compensation rates should be exempt from this experimental new law so that we limit unintended negative consequences.”

The issue, as put forth by Councilmembers Teresa Mosqueda and Lisa Herbold, is that expanding the scope of exempted companies gives app-based networks the option to readjust their business models to slot into the exempted definition, skirting the minimum wage law altogether.

“It could vastly expand the definition of marketplace network company, creating such a loophole … the ability of the Office of Labor Standards to track on-demand jobs …could be nearly impossible. It could be a barrier for enforcement, requiring an assessment of the entirety of a company’s offers before determining whether workers are being paid what they need,” Mosqueda said.

PayUp will go to a final vote on May 31.

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Seattle nears passage of nation’s first minimum wage for app-based, delivery gig-workers