(The Center Square) – It appears that rideshare drivers in Seattle will be making less money when a new state law creating a minimum pay standard and benefits for drivers contracting with ride-hailing companies goes into effect on Jan. 1, 2023.
House Bill 2076, passed by the Legislature and signed into law by Gov. Jay Inslee earlier this year, would guarantee drivers outside of Seattle $1.27 per mile and 37 cents per minute, with a $3.26-per-trip minimum.
Seattle’s rideshare law, passed in 2020, mandates higher pay – $1.50 per mile, 64 cents per minute and a minimum of $5.62 per trip – for ride-hailing workers in the city. The state legislation would allow the city to retain its higher rate.
“Seattle is actually going to stop their enforcement of their rules and going to be applying the rules and provisions under 2076,” Bryan Templeton, program manager for employee standards at the state Department of Labor & Industries, revealed during a Wednesday appearance on TVW’s “The Impact.”
The new law seeks to stake out a middle ground of sorts between employee and independent contractors, the latter of which is how drivers are classified by companies like Lyft and Uber.
“So, the statute itself does not make a special carveout to reclassify these drivers as employees for Uber and Lyft,” Templeton said.
What the law does is create a special carveout for protections alone, he explained.
“They are still not classified as employees of the firm,” Templeton said.
Nevertheless, the law establishes an earnings baseline for independent contractors, as well as a paid sick leave policy for drivers.
“They are calculated also based on CPI [Consumer Price Index] and adjust with each year at the same time we update what minimum wage rates will be in the state,” Templeton said of how the pay rate is determined. “We’re also going to updating what the driver compensation rates are going to be.”
Other factors include time and the area in which drivers are operating, he added.
Washington’s new law also creates a paid sick leave policy for the gig economy workers.
“In Washington state, the minimum paid sick time that you get is one hour for every 40 worked, and it’s going to accrue very similarly in this setting as well,” Templeton explained.
But it won’t be exactly the same, he noted.
“One of the unique differences between paid sick time accrual in a traditional setting where you’re working 40 hours a week full time and the drivers is it’s going to be based upon an average,” he said.
The legislation will allow drivers to access a third-party driver resource center where they can go if they have issues related to getting deactivated from the platform. The center will help with the investigation process, as well as guide drivers through the appeals process.
Seattle-based Drivers Union, the only bidder, was selected after the state put out a request for proposals, Templeton said.
He went on to say he didn’t think the new law would mean rideshare companies would raise their rates.
“To date I have not heard anything from those companies of their intent to raise rates, and I certainly couldn’t comment on what their intent was without that information,” Templeton noted. “But we haven’t heard anything to that nature so far.”
A representative of one of the major rideshare companies is upbeat about the new law.
“This new law decisively gives drivers what they want – to stay independent while gaining historic new benefits and protections,” Ramona Prieto, Uber’s head of public policy in the western U.S., told The Center Square via email. “This first of its kind legislation in the country is the result of hard work and a commitment from all parties to stay at the negotiating table to better the lives of Washingtonians. We hope this collaboration shows other cities, states and countries around the world what can be accomplished when drivers are put first.”
Templeton indicated some other states have shown interest in Washington’s law.
“So during this period of time there is a lot of interest from other states just in how we’re doing this, what it’s going to look like when it goes live on Jan. 1st,” he said. “And we are a trendsetting state in this space. We will be the first one in the country to take this leap, and I anticipate others will follow.”
Mark Harmsworth, director of the Center for Small Business at the free market Washington Policy Center think tank, isn’t so sure.
“Fixing rideshare wages will remove job flexibility and increase ride and delivery prices,” he said in an email. “The success of the gig economy is based on flexibility for workers and a required hourly rate will force ride share companies to reduce available hours and increase prices.”
There are an estimated 80,000 rideshare drivers in Washington.
