Nelson’s Gig Worker Sub-Minimum Wage Proposal Fails to Deliver Lower Fees

Proposed Seattle gig worker ordinance would eliminate minimum wage for delivery workers and hope the benefits trickle down

Nelson’s proposal would slash pay, reduce transparency, and effectively eliminate flexibility protections while doing nothing to address excessive fees or the availability of jobs for bike delivery workers

After a three-month big-dollar lobbying campaign by DoorDash and other food delivery corporations, Council President Sara Nelson has released a proposed new delivery ordinance which fails to deliver lower fees to customers, and fails to provide any relief for bike couriers. The proposal would simply reduce worker pay well below minimum wage, in the hopes that it will trickle down to customers in the form of lower fees instead of simply being pocketed by the app corporations.

Nelson’s proposal provides no assurances that fees will in fact be lowered – in fact, the new law allows companies to collect even more fees, this time from the workers themselves, for seeking to be paid for their work. The multi-billion-dollar app corporations would be allowed to pay workers far less than minimum wage, continue to throttle bike delivery jobs, and gouge customers with any fees they’d like, for whatever reason they’d like. They wouldn’t even be required to disclose how much of those fees is being paid to workers and how much is being pocketed by the companies.

This wildly unbalanced, rushed proposal is the natural result of poor governance and an illegitimate stakeholdering process. In fact, City Council visitor logs indicate Nelson has developed this proposal with input exclusively from the app corporations themselves, the lobbyists they pay, and an organization they founded and fund.

Key changes proposed in CB 120775

CB 120775 is a long, complex piece of policy which is written to gut existing city labor standards for gig workers and effectively eliminate minimum wage protections for people doing food delivery. Key sections of the proposal are noted below:

• Dramatically cut pay well below minimum wage: Section 8.37.050 B(1) of this proposal would force an immediate 24% cut in workers’ pay (from 44¢ per minute of delivery time to $19.97 per hour, or about 33¢ cents per minute) – a cut of over $6 per hour. Gig delivery workers are only paid for time actively making a delivery, and because they’re treated as independent contractors, they are responsible for paying all their own payroll taxes and covering all their own expenses. For this reason, it is necessary to pay an additional factor above minimum wage for each hour actively delivering in order to ensure take-home pay equivalent to minimum wage for each total hour of work, after expenses. (As a comparison, imagine a reporter was only paid for their time with their hands on a keyboard, actively writing a story; that reporter would have to be paid higher than $19.97/hour for active writing time in order to end up with $19.97/hour after accounting for all their work time.)

• Make workers lose money for each mile they drive: Section 8.37.050 B(2) of this  proposal would cut workers’ pay for mileage in half to an arbitrary 35¢ a mile — dramatically less than the standard IRS mileage rate (currently 67¢) that determines mileage pay for almost every other worker who uses their personal vehicles for work purposes, from city contractors to state lobbyists to UPS drivers who use their personal vehicles for seasonal deliveries. The IRS rate is the gold-standard method of accounting for the cost of driving, and a per-mile rate so far below the IRS rate means that workers would be losing money for each mile they drive. 

• Do nothing to control excessive fees: This proposal would do literally nothing to compel the app corporations to lower excessive junk delivery fees — the phrase “ customer fee” does not even appear in the proposal. While the fees the companies charge to restaurants are currently limited by city law, no such protection against excessive fees would be extended to customers or to workers. The entire idea is to slash workers’ pay, take away their rights, and hope the benefits trickle down. 

• Do nothing to address app corporations’ decision to throttle bikers: This proposal would do literally nothing to compel the companies to equitably offer jobs to bikers — bike couriers do not even appear in the proposal. The reason bikers are being cut off from deliveries is that apps’ algorithms may determine that drivers are faster on average and therefore cut off bicyclists’ access to most orders. Reducing every worker’s pay while still setting time-based minimum rates does nothing to address this disparity, and likely will not improve job availability for bikers at all.

• Eliminate disclosure requirements on fees and orders for customers, workers, and the city: Section 8.37.070 of this proposal would eliminate current rules requiring that app corporations disclose information to the city about pay rates, fees, commissions, and order volume. It would also dramatically reduce transparency for customers and workers. In fact, under this proposal the app corporations would not even be required to disclose to customers how much of the excessive fees they charge is being paid to workers, and how much they’re pocketing. And workers would no longer see a breakdown of pay and tips on offers, making it easier for companies to revert to pay models under which they previously faced public backlash for stealing tips by reducing company pay on orders with higher tips.

• Eliminate workers’ flexibility protections: Section 8.37.080 of this proposal would allow the app corporations to treat workers more like employees than contractors, by allowing them to penalize workers for choosing which jobs to accept or choosing when to work. The corporations could penalize workers in whatever way they want — including by denying them access to any jobs at all — as long as a "contract" is still in place, regardless of whether they still get offered any jobs. This would effectively eliminate all flexibility protections.

• Eliminate workers’ ability to enforce their rights in court: Section 8.37.230 of this proposal would eliminate the “private right of action,” denying workers the ability to protect their rights in court if the app corporations break the law. When coupled with gutting the Seattle Office of Labor Standards’ enforcement and rulemaking authority, this destroys any meaningful enforcement of the law.

Gig workers, policy experts, and community supporters are available to discuss the implications of this proposal ahead of Thursday’s committee hearing. Contact Hannah Sabio-Howell (hannah@workingwa.org) to arrange.