Seattle City Council set to pass independent contractor regulations, despite stakeholder concerns

Seattle Washington

From Seattle City Council Insight, Kevin Schofield reports that the Seattle City Council is considering a bill to require the businesses that engage with independent contractors to have written agreements and make payments within a certain timeframe. Kevin writes:

Tomorrow afternoon the City Council will likely give final approval to a bill that requires the employers of independent contractors to provide pre-contract written disclosure of contract terms, and to make payments within certain timeframes, and to provide similar written disclosures accompanying payments. It sounds straightforward, but the devil is in the details and the Council is pushing this through despite the misgivings of the city’s own Office of Labor Standards (OLS) and Labor Standards Advisory Commission (LSAC).

Last month both OLS and the LSAC sent letters to the Council raising concerns and requesting a slower pace of progress on the bill. OLS raised three specific concerns: first, it felt there needed to be more time for engaging stakeholders on the bill; second and related to that, it feared unintended consequences because of the breadth of the application; and third, it was concerned about the budgetary impacts on the department in order to conduct education, outreach, and enforcement. The LSAC agreed with OLS, saying in its letter, “this ordinance, if enacted, would be unworkable without additional resources for OLS. The outreach necessary to make this legislation workable would dwarf OLS’s current capabilities.”

The breadth of the bill, which the LSAC said “goes far beyond” its recommendations, was of particular concern given the overlap with ongoing efforts to establish minimum pay standards for domestic workers and “gig” workers. In fact, the LSAC, in somewhat of a reversal from its original position, recommended in its letter that the Council postpone the work on the transparency requirements and prioritize minimum pay standards for gig workers. “Rather than carving out exceptions for those sectors, the Commission urges council to build those minimum pay systems before turning to this complement.” It specifically called attention to one potential unintended consequence of the current bill: requiring pre-disclosures might end up establishing a ceiling on gig workers’ pay, instead of a floor.

Nevertheless, the Council is pushing ahead and has embraced trying to fix its bill by doing the very thing the LSAC asked it not to do: expand the number of exemptions it carves out. Contracts under $600 are exempted, as are independent contractor relationships outside of “services in the course of  the hiring entity’s business or commercial activity.” Also exempted: when the contractual relationship is just for property, such as a hair stylist renting out a workspace in a salon.  Gig workers are still covered, but provisions in the bill specifically for gig workers (such as those requiring notices to be given electronically within an app, and before every job) have been removed. And the Council granted to the Director of OLS the ability to unilaterally exempt other sectors, under certain conditions:

The Director may issue rules excluding classes of independent contractors from this definition based on the Director’s determination that the class of independent contractors has adequate bargaining power in establishing their business relationships with hiring entities. The Director shall not exclude classes of independent contractors from this definition who are working in professions with workforces that are vulnerable to violations of this Chapter 14.34. When considering whether classes of independent contractors are vulnerable to violations of this Chapter, the Director may consider any number of factors, including but not limited to whether classes of independent contractors work in industries prone to misclassification, have limited English proficiency, or are unlikely to volunteer information about violations.

But the Council also removed specific exemptions for medical personnel and other other fields that are covered by “a comparable code of ethics.” While there was talk of exempting small businesses to spare them from the extra overhead every time they, for example, hire an outside IT guy to do some work on their computers, the Council chose not to add such an exception. However, because it only applies to commercial activities it exempts the city government from its own labor law, with the exception of Seattle City Light and Seattle Public Utilities.

But now there are so many dimensions to the applicable exemptions that it’s difficult to keep track of who this ordinance actually covers and when — and of course the OLS Director can change it over time as well, without the Council’s involvement.

Read the full story at Council set to pass independent contractor regulations, despite stakeholder concerns (UPDATED)

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