Landmark Seattle Proposal Would Guarantee Gig Workers a Minimum Wage

by Ben Adlin

App-based gig workers in Seattle would earn at least minimum wage plus expenses under a proposal expected to be officially introduced in the City Council next month.

The legislation, still in draft form, would put Seattle at the national forefront of protecting app-based workers who deliver groceries and packages, walk dogs, pick up restaurant orders, and perform various other tasks. It would also regulate the companies that contract their labor, such as Amazon, Instacart, DoorDash, Handy, UberEats, Shipt, and others.

While such services were growing in popularity before the pandemic, early stay-at-home directives and lasting social distancing have led to an even sharper spike in demand. Food delivery apps, for example, reportedly saw business more than double during the early months of the pandemic.

But workers who took those jobs — disproportionately People of Color as well as women, who've cited the flexibility and relative safety of delivery jobs compared to rideshare apps — say they're often left making just a few dollars per hour after factoring in expenses.

"The drivers are taking up all the expenses, and the gig companies are taking up all the profits," Carmen Figueroa told the Emerald in a recent interview. "They've made millions off my labor, off of people like me, and it's time to give back a little bit."

Figueroa, who is limited in the type of work she can do as the result of a back injury, said gig work is one of the only jobs that can provide the flexibility to rest when necessary. She's not "disabled enough" to qualify for state or federal aid, she said, but is limited enough that she can't work a traditional job. "So for me, this is the only thing that I can do."

Recently, however, Figueroa has seen her earnings plummet, often because of changes imposed by companies with little warning. She mostly delivers food, usually for GrubHub but occasionally for DoorDash.

"I don't work for Postmates anymore since they changed their pay structure," Figueroa explained. "I've deleted the platform from my phone."

Unlike more traditional wage-based jobs, like a restaurant's in-house delivery driver, gig-economy platforms typically classify workers as independent contractors. While that can mean added flexibility, it also means individuals are left to cover operating expenses, including gas, insurance, and the extra taxes and fees that accompany self-employment.

If Figueroa completes a delivery and doesn't get a tip, bonus, or any other sort of company-provided incentive (often limited to certain areas or times of day), she said, she'll often just make $3 to $5 per order. "A lot of people don't understand that all the fees — no matter what they're labeled, even if they're labeled 'driver fee' — that all goes to the company."

"Also, I don't feel like it's the public's responsibility to supplement my pay with a tip," Figueroa added. "I would like things to change so I don't have to rely on the generosity of strangers to pay my rent."

Workers also say they're sometimes deactivated from platforms because of administrative hiccups, misunderstandings, or without explanation at all, leaving them scrambling to make ends meet.

The forthcoming City Council legislation would require a broad range of app-based job platforms to pay workers a per-minute rate for engaged time plus a per-mile rate for travel. It's meant to ensure that workers take home at least Seattle's minimum wage ($17.27 in 2022), even after accounting for the additional costs and administrative burdens of being a gig worker.

Adjustments included in the per-minute and per-mile rates are meant to cover contributions to payroll tax, unemployment, and worker's compensation as well as rest breaks and vehicle expenses. Although companies could still designate workers as independent contractors, they would need to shoulder more of the cost of doing business, almost as if the workers were employees. Companies would also be required to reimburse workers for reasonable expenses.

The legislation follows other pay-floor rules for gig workers in New York and California, as well as a separate Seattle law passed in 2020 that extended minimum wage protections specifically to rideshare drivers. The new proposal, however, would be the country's most comprehensive regulation of the app-based gig economy.

At an event outside City Hall earlier this month, gig workers and organizers from the advocacy group Working Washington set up what they called a "special delivery" of 400 to-go bags, to represent what the campaign estimates are 40,000 or more gig workers in the City. On each bag was a receipt-like label, illustrating what organizers say some workers get paid for a single job after expenses. Tags included payments of less than a dollar.

The action was intended to put pressure on the City Council to move forward on the so-called "Pay Up" package of reforms, Figueroa said, and to build awareness and support among Seattle residents.

"The City Council, I think they're well aware of the plight of the gig workers, but I don't think the general public is aware," she said. "There are thousands of us. A lot of people just don't know."

Organizers at Working Washington announced the Pay Up campaign nearly two years ago, in March 2020, just weeks before State and local authorities announced COVID-related closures. Since then, they've been working to get more gig workers involved.

In the past year, City Councilmembers have met nearly a dozen times with activists and organizations, members said at a committee meeting earlier this month. The meeting also included a staff presentation to councilmembers and public comment.

"Today in Seattle, workers on apps like DoorDash, Instacart, and Handy are struggling with subminimum wages because they are currently excluded from our City's labor standards," Sage Wilson, a Working Washington representative, told the council. In a recent survey of app workers, Wilson said, almost two-thirds reported having less than $100 in their bank accounts at some point last year, and more than a third said they were unable to afford groceries or other basic items.

Led by Councilmember Lisa Herbold, of District 1, which includes South Park and West Seattle, the Pay Up bill has yet to officially be introduced. Council staff told the Emerald that Herbold was likely to take that formal action sometime in March.

Separate legislation passed in 2020, known as the Fare Share wage ordinance, went into effect last year, setting minimum pay for rideshare drivers, but it didn't affect other app-based gig workers. A temporary COVID-related policy provides gig workers an additional $2.50 per trip hazard pay, but it's not clear how long that provision will last.

At the State level, advocates for rideshare drivers are working to build support for HB 2076, which would guarantee transportation gig workers sick time, workers' compensation, protections against retaliation, and a process to address deactivated accounts.

The forthcoming Pay Up legislation would be far more sweeping, covering virtually any app that handles payment and processing of gig-work transactions. It would not apply to more limited person-to-person platforms, like Craigslist, which simply connect buyers and sellers, or to certain other app-based services, such as Airbnb.

Some members of the City Council have already expressed early skepticism. Councilmember Sara Nelson, an at-large member who represents the city as a whole and was elected just last year, said at the recent meeting that she is "supportive of providing gig workers in the economy with a minimum wage" but raised concerns about the plan's possible impact on businesses and consumers. She mentioned that her mother had been relying on delivery apps during the pandemic to avoid exposure to COVID-19.

"We've also seen that these platforms have kind of shifted from a convenience to a necessity," Nelson said. "They've served a vital function providing access to food and services, and they've also provided jobs for workers, and that's especially important for people who have gotten laid off during the pandemic, which has disproportionately impacted People of Color, immigrants, etc., whose jobs were less secure."

Nelson suggested that services people are ever-more reliant upon could get more expensive under the new plan, saying that the City's Fare Share ordinance, which applied to rideshare drivers, raised prices by more than 50% and led to declines in demand.

Council staff acknowledged that services could become more expensive if the proposal were to become law, depending on how much of the added cost app companies decide to pass on to consumers. That could make the already steep cost of living in Seattle even more expensive.

Advocates, however, stressed that the basic point of the legislation is to ensure gig workers in Seattle have the same floor pay and protections as every other employee in the City.

"After gas, mileage, and vehicle wear and tear, gig workers earn less than minimum wage," Herbold said in a statement issued on the same day as the worker action at City Hall. "Gig workers have been on the front line during the pandemic, footing the bill for masks and other sanitizing equipment to maintain public health for themselves and their customers. It's long past time for a solution that guarantees a minimum wage, flexibility, transparency, and ensures that tips are tips and go directly to workers."

In a press release, Working Washington also noted that DoorDash CEO Tony Xu, the Bay Area's top-earning CEO in 2020, raked in roughly $413 million in compensation during the first year of the pandemic.

Instacart told the Emerald in an emailed statement that it looks forward to reviewing the full Pay Up legislation once it's introduced, adding, "It's important that any ordinance reflect our ongoing discussions, which have focused on preserving access to flexible earnings opportunities for the more than 12,000 Seattle shoppers who choose to earn through the Instacart platform."

Workers who spoke at the City Council committee meeting, meanwhile, shared stories of how they'd seen pay fall drastically in the past few years as companies unilaterally readjusted their payment systems, such as by moving "peak times," when pay is higher, or adjusting incentives for active drivers in ways that feel manipulated. Others complained about being deactivated from apps, leaving them without recourse and struggling to pay bills. "Flexibility shouldn't mean homelesness," one worker told the council.

Some workers already protected by certain Seattle ordinances would see further protection under Pay Up. Domestic workers who do contract work through apps, for instance, are already eligible for minimum wage under the City's 2018 Domestic Workers Bill of Rights, but Pay Up would allow them to also claim reimbursement for reasonable expenses, a protection not provided under current law.

The Pay Up proposal would eventually lead to numerous bills aimed at creating a suite of worker protections for app-based gig workers. This first measure deals mostly with compensation, while future bills are expected to include rules around deactivation of worker accounts and background checks, bathroom access for drivers in the City, anti-discrimination and reasonable-accomodation provisions, and the creation of an app-based worker advisory board.

Councilmember Teresa Mosqueda, another citywide representative, told the Emerald in an email that "[t]he Pay Up campaign is a groundbreaking area of labor policy, signaling all workers need the basics — wages, benefits, job security and more — to survive. As gig work and the future of work evolves, so must our labor protections."

Seattle was among the first wave of jurisdictions in the U.S. to establish a $15 minimum wage, in 2014, which has increased with inflation since then. Federal minimum wage, meanwhile, has been stagnant at $7.25 per hour since 2009.

Figueroa said it took the COVID-19 pandemic to jostle her into action, and she's proud that Seattle is helping to lead the way.

"When the pandemic hit, I just felt like things had to change," she said, "and I needed to get more involved. … I think we're going to change the world, so to speak. I'm excited about that, that we could be the model."

Featured Image: Local gig workers delivered 400 to-go bags outside Seattle City Hall on Feb. 16, 2022, to draw attention to the wages they currently receive from app companies, including Uber, DoorDash, and Instacart. (Photo: Alex Garland)