After a controversial minimum wage law for food delivery drivers in Seattle went into effect in January, tech giants including Uber and DoorDash made it clear they weren’t happy.
They immediately added substantial new delivery fees for consumers, which caused demand to drop. They also cranked up their lobbying efforts, spending heavily and making frequent trips to City Hall to meet with councilmembers, according to visitor logs from the Seattle City Council.
Now, a new proposal could reverse the wage standards set by the law, one of the first in the nation to set minimum pay requirements for delivery drivers.
Seattle City Council President Sara Nelson is the sponsor of a proposed ordinance that would tweak several aspects of the original bill, including lowering the minimum pay threshold.
It’s the latest chapter in a battle between tech-fueled delivery platforms and supporters of the original minimum wage legislation, passed as part of several unique “PayUp” laws approved recently in Seattle designed to provide protections to gig workers that are treated as independent contractors.
The current law, approved unanimously by councilmembers two years ago, requires companies to pay drivers a minimum per-minute amount of 44 cents and a minimum per-mile amount of 74 cents while making a delivery, or a minimum of $5 per order.
DoorDash said the law requires the company to pay drivers in Seattle at least $26.40 per hour, before tips and pay for mileage — well above the city’s $19.97 minimum wage.
The new proposal, CB 120775, sets a per hour minimum of $19.97 for “engaged” time, or when making deliveries. There is also a per-mile minimum of 35 cents. It eliminates the per-minute rate.
“The compromise proposal that the City Council is considering is a promising step toward increasing affordability for consumers and restoring millions in lost revenue for merchants and Dashers in Seattle,” a DoorDash spokesperson said in a statement to GeekWire.
Working Washington, a nonprofit that helped pass the original legislation, said in a press release Monday that the new ordinance would “simply reduce worker pay well below minimum wage.” The organization cited payroll taxes and personal expenses that drivers must pay for, and noted the standard IRS mileage rate of 67 cents per mile.
The proposal also eliminates the ability for the city to require certain data from the companies related to driver compensation and time worked. It also reduces how long on-demand offers are made available to drivers; calculates pay over an earnings period versus per-offer; and restricts a rule that gave drivers a private right of action to sue the companies.
The proposed ordinance does not mention customer fees, however, DoorDash told GeekWire that the fees may be lowered with a new law in place.
“The regulatory response fee in Seattle helps offset the costs associated with the current law,” the company said in a statement. “If those costs can be decreased through reform legislation, we will explore all options to increase affordability for consumers, including a reduction of the fee.”
The proposal, released Monday afternoon, will be discussed in Nelson’s committee this week, and could possibly go to a full council vote as early as next month.
“Good policy should always reflect input from the groups and individuals impacted, the proposed reform ordinance is a step in that direction by establishing the Seattle minimum wage as an earnings floor while also empowering drivers and restaurants with more earning opportunities,” Uber said in a statement.
Nelson told GeekWire in February that she was worried about the fallout from the new law and fees. Some restaurants that rely on delivery orders say their sales have dropped significantly in recent months.
“I’m not going to redo the whole legislation,” Nelson said in February. “I want to make changes that will reduce the cost of delivery so that people start ordering again, at the same levels they were before.”
Anecdotes from drivers offer mixed responses on impact from the law. Some drivers who spoke at a City Council meeting earlier this month say they are earning less per hour since the legislation went into effect, but others said they are earning more.
Solo, a software startup that helps more than 250,000 independent contractors manage their earnings, told GeekWire last month that Seattle-area delivery drivers are making higher hourly wages but they’re also getting fewer tips, which typically make up around half of total earnings.
Uber and DoorDash adjusted tip mechanisms in their apps after the law went into effect — for example, lowering the suggested tip amount or moving the tip prompt to after an order is completed.
The Stranger reported this month that delivery drivers are making more money now, but bike couriers are not.
Hilary Wething, an economist at the Economic Policy Institute, told GeekWire in February that more data is needed to fully determine the impact of the new minimum wage law in Seattle.
Amazon told GeekWire in January that it does not expect impact from the minimum wage law on customers who get items delivered from Amazon Flex drivers who work as independent contractors and use their own vehicles.
Other “PayUp” policies include an ordinance related to the worker deactivation process and a 10-cent per-order fee approved in November that will help fund the implementation and enforcement of the “PayUp” laws. Seattle also passed a sick leave law for delivery workers last year.
The council now has six new members who joined in January, when Nelson became president.
The new laws in Seattle coincide with the broader debate over how gig workers should be compensated, and whether they should be treated as employees or independent contractors.
Seattle will be closely watched as a testing ground for the impact of labor standards in a growing food delivery market facilitated by tech companies that tout the flexibility and independence offered by their platforms, but have come under scrutiny for their impact on workers and restaurants.
New York City also recently passed a minimum wage law for delivery drivers. Minneapolis plans to implement a minimum wage for Uber and Lyft drivers, but has delayed it amid threats from Uber and Lyft to leave the city.
There are existing minimum wage laws enacted in 2022 by the state of Washington for Uber and Lyft drivers that shuttle passengers around town.
DoorDash reported revenue of $2.3 billion, up 27% year-over-year, in its most recent quarter. Uber’s delivery revenue grew 6% to $3.1 billion in the fourth quarter.
“The council cannot introduce this legislation and pretend this has anything to do with protecting Seattle’s local economy and our regional workforce,” Working Washington said in a statement. “This is about letting corporations have their way in our city and exploit workers, customers, and small businesses.”
See the proposal’s full text, with changes from the original bill, here. This summary note also has a rundown of the changes.
