Washington’s Gig-Economy Compromise
As the Washington Legislature churns through their final product before the constitutionally mandated end of Session on March 10, recent developments at the intersection of labor, workers’ compensation, and so-called “gig-economy” companies have reached Governor Inslee’s desk.
Background. Gig-economy companies are generally thought to include workers engaged in part-time, temporary, or independent contractor positions to provide services such as transportation, to food delivery, to groceries. In recent years, state legislatures and “gig-economy” companies have sought to rectify continuing issues as to independent contractors and the flexibility arising out of setting one’s own work schedule, including the use of ride-sharing apps. Washington seeks to resolve that issue with House Bill 2076.
It is clearly a compromise between one of the more powerful unions in the state, Teamsters 117, and two of the leading “gig-economy” companies currently operating, Uber and Lyft. It should be stressed that, as of now, it relates to “transportation network companies” or a ‘company that uses a digital network or software to connect passengers to drivers for providing a prearranged ride.’ So, the effect should apply almost exclusively to Uber/Lyft. But, it is instructive at what some down-stream impacts could be for other platform-based companies in the gig-economy.
The Bill contains several core-provisions for employers and companies to be aware of.
Paid Sick Leave and Minimum Compensation. The Bill provides for paid sick leave accrual and minimum compensation. First, Drivers are eligible to: (1) accrue paid sick time upon recording 90 hours of passenger platform time on the TNCs platform; (2) carry over up to 40 hours of unused paid sick time to the next year; and (3) use sick time in increments of four hours or more. Second, it provides minimum total compensation for drivers and trips in the City of Seattle (the greater of (a) 59 cents per minute and $1.38 per passenger platform mile; or (b) a minimum of $5.17 per dispatched trip; or outside of Seattle (the greater of (a) 34 cents per minute and $1.17 per passenger platform mile; or (b) a minimum of $3 per dispatched trip.).
Industrial Insurance and Labor Regulations. The Bill eliminates previous waivers of workers’ compensation coverage for TNC’s before L&I (Title 51). That is, L&I must apply workers’ compensation premiums to TNC’s, and adjust such premiums as new factors develop. Though the application of the workers’ compensation statutes is said to not be indicative of an “employer-employee” relationship, its real application eliminates any questions as to whether Drivers are considered employees for purposes of workers’ compensation. But, despite this sweeping impact, it does clarify that a driver is only considered an “employee” while utilizing the application software of the TNC. So if an injury were to occur outside of the platform usage, the worker would not be considered covered under Title 51. It would also have additional application under Title 49 (Labor Regulations) using the same theory and example.
Regulations and Licensing. The Bill providers for stricter regulations of TNC’s and involves uniform regulations in conjunction with Department of Licensing standards.
Driver Resource Center. And it creates a fund for a Driver Resource Center to, among other things, support drivers in resolving disputes around deactivations and receipt of tips directly from consumers.
In many ways, the Bill expands certain aspects of Seattle and King County’s regulations of TNC’s. Seattle has previously instituted a minimum wage and created a dispute resolution process for affected gig-workers. The Bill would preempt cities and counties from setting their own regulations of TNC’s, and the Bill singles out Seattle and King County for preemption. So, in effect, Seattle and King County would be precluded from enacting any new measures against TNC’s and any measures which conflict with the text of the Bill should be moot.
As above, this appears to be focused on companies like Uber and Lyft, who have vocally been at the forefront of the issue. But there are additional gig-economy companies which could be impacted downstream. This includes food couriers and other transportation services. The impact would thus subject those companies to WISHA and workers’ compensation coverage, minimum wage requirements, and paid sick leave. We foresee such activity ramping up in the 2023 Regular Session.
As of March 14, 2022 the Bill has passed both chambers and awaits Governor Inslee’s signature.