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 bike delivery worker 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.”
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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 proposed amendments that rolled back some of the biggest legal giveaways to gig companies in Nelson’s proposal. Councilmember Rob Saka sponsored an amendment to remove a provision 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.
It would sure help the citizenry if the media actually reported facts instead of a biased narrative.
1. Independent contractors do not pay “self employment” taxes or workers compensation insurance. They pay federal income tax like everybody else. Hell, they don’t even pay social security taxes (although that will likely bite them in the ass as they age.)
2. The drivers can deduct their mileage at the IRS rate. If they are compensated less than the IRS rate by the delivery companies they can deduct the difference.
3. WA hasn’t had a tip credit in my lifetime, so why even mention it.
4. WA gas prices are the 2nd highest in the nation thanks to Inslee’s climate policies which offer exactly zero environmental benefit while at the same time making life increasingly expensive for the lowest income workers who depend on their car.
As an independent contractor/self-employed individual, I can assure you that we do, in fact, pay “self-employment taxes”, although they aren’t really called that. What we DO pay is “both sides” of Social Security and Medicare. For “real” employees, the employer pays 6.2% of the employees’ gross income into Social Security and another 1.45% for Medicare. Independent Contractors/Self Employed people pay 12.4% to Social Security and 2.9% to Medicare, PLUS the federal income tax. People who do not pay those taxes get in trouble with the IRS when they file annually.
You are 100% correct about social security taxes and I am 100% an idiot. For some reason I thought sole proprietors were exempt. And here I am criticizing the media for not having their facts straight! I should look in the mirror. Thank you for bringing me up to speed.
Of course it’s a huge emergency, how can they make payments on their second limousines unless they squeeze workers more? Good thing they have a city council of their choosing who immediately knows what’s most important. Come on Nelson, chop chop!