Seattle City Council Passes US’s First Minimum Wage Guarantee for Gig Workers

Labor activists and gig workers in Washington State are celebrating this week after the Seattle City Council approved new rules Tuesday designed to ensure that companies such as DoorDash, UberEats, Grubhub, Instacart and Amazon Flex are paying their couriers, delivery drivers, and other gig workers the city’s minimum wage, which is set at $17.27 for most Seattle workers.

The rules are the first in a series of reforms known as “PayUp” that supporters say would make Seattle the first city in the United States to set standards around pay, flexibility and transparency for app-based delivery workers. If Bruce Harrell, Seattle Mayor, signs the legislationIt was unanimously approved by the city council, app companies will have 18 months update their practices in Seattle to ensure these gig workers are paid the city’s hourly minimum wage after expenses for each job they work are taken out. Tips would be added to this. The rules would also require that payroll transparency be maintained and that app companies do not punish gig workers based on the jobs they accept or how many hours they work.

DoorDash and Instacart were among the companies that resisted the PayUp proposal. emails and pop-up ads warning workers and customers that the new standards would raise prices, create new “fees” and reduce earnings. Instacart said in an emailed statement that the Seattle City Council ignored “serious concerns” raised by shoppers, drivers and “business leaders,” but the council says it held 10 large stakeholder meetingsThe proposal was approved last year. Critics said the industry’s warnings are misleading and fail to mention that gig workers often rely on unpredictable tips and routinely take home less than Seattle’s minimum wage after paying for gas and other expenses.

Recent analysisWorking Washington, a labor rights organization that works with gig workers in order to promote PayUp, conducted 400 job interviews of Seattle workers for on demand delivery apps. The average hourly pay for gigs was $9.58 after basic expenses such gas and vehicle maintenance. About 92 percent of gigs paid less than Seattle’s $17.27 hourly minimum wage, which ranks among the highest local wage floors in the country but also reflects Seattle’s notoriously highCost of living

These standards are intended to ensure gig workers earn at least the hourly minimum wage, before tips and after expenses. App companies would need to reimburse drivers for fuel, car repairs, and driving to work with a 64-cent-per-mile reimbursement accordingWashington. A 38-cent-per-minute “cost factor” would cover previously unpaid work between gigs and costs such as payroll taxes and medical leave. PayUp supporters believe the standards are about ensuring gig workers have the means to afford living in the city where they work.

“When I started working on Gopuff, I had no idea what I’d be facing,” said Wei Lin, a Seattle gig worker who delivers groceries through the Gopuff app, in a statement. “I have to put in 70 or 80 hours a week just to get by. Each order costs only $4 Sometimes that doesn’t even cover our gas and mileage costs.”

GrubHub, UberEats, and DoorDash saw their revenue rise during pandemic lockdowns when consumers stayed at home and restaurants and stores were forced to sign up for delivery apps. accordingTo Marketwatch. DoorDash is the largest food delivery service app. reported $4.89 billionIn revenue in 2021 up 69 per cent from the previous years. However, the competition is fierce among apps. some companiesAre struggling to stay profitableAs pandemic restrictions disappear.

In a statement the Seattle Times, a spokesman for DoorDash called PayUp “untested and hasty,” and said the standards would lead to higher costs for customers, fewer orders from businesses and reduced earnings for gig workers. Delivery “dashers” in Seattle make an average of $28 per hour when on delivery, the company boasted.

In a pop-up ad displayed to app users, DoorDash also claimed the “Seattle City Council’s proposal” may cause “fee increases” of up to $5. However, the PayUp ordinance does not include any language about “fees” or “fee increases.” Assuming the average DoorDash delivery takes 20 minutes, a $5 fee on each delivery (imposed by DoorDash) would provide a Seattle gig worker with $15 per hour, which is $2.27 short of the local minimum wage. According to Working Washington’s calculationsA $5 additional fee would mean that DoorDash would admit that it currently pays its delivery drivers only $2.27 an hour after expenses. This would allow customers to pass on the cost of paying a minimum wages.

App companies avoid minimum-wage requirements by employing workers as independent contractors instead of employees. This model they supported in California by investing millions of dollars in a campaign to pass a 2020 statewide referendum. Although the companies claim their model allows workers flexibility, critics argue that it allows apps pay as little as $2 an hour after expenses. In an email, Instacart said the “disastrous” policy would raise prices for consumers.

Labor organizers see it different. The PayUp standards would “level the playing field” from company to company and job to job, according to Sage Wilson, a spokesperson for Working Washington.

“It’s an absurd loophole that gig companies have built a business model to exploit, and we shouldn’t be incentivizing business models that rely on that kind loophole,” Wilson said in an interview.

Working Washington says the PayUp standards would still allow apps to offer payment above the wage floor for a given job, adjust pay to match consumer demand, and offer bonuses and other incentives — as long as each gig meets the new pay minimum-wage standards. Wilson said that the standards were created by organized gig workers from Seattle. With the support of the city council, Wilson hopes the policy will inspire other cities to increase wages and provide benefits to gig workers.

“There is really strong overall consensus among workers and the public at large that people should be taking home the minimum wage after expenses from their work,” Wilson said.