Seattle council may make U-turn on delivery drivers’ pay as fees increase

The Seattle City Council took up a suite of proposed changes Thursday to the city’s minimum pay standard for app-based delivery drivers that would cut hourly and per-mile rates, change when and how pay is calculated, and roll back regulatory requirements placed on the companies earlier this year.

Taken together, the goal of the changes is to incentivize companies to cancel the lofty fees many have recently imposed and once again make delivery services more appealing to customers who’ve balked at the price tag on their burrito. However, advocates for the pay standard say that the changes go too far on too little information.

By the standards of Seattle’s typical legislative process, the council has moved at breakneck speed to rewrite a law that is barely four months old. The urgency, Council President Sara Nelson said, is reflective of what she and her colleagues have heard from drivers and restaurants about the repercussions of the new law.

It’s also the clearest example yet of the political pendulum swing in City Hall, away from previous councils’ desire to pass first-in-the-nation labor regulations and toward a more conservative approach that gives companies greater power.

Whether the changes would lead to cheaper deliveries is not clear; the bill under consideration does not require companies to eliminate their fees. It would also strike down certain requirements around transparency and enforcement that nonpolitical council staff suggested do not have a clear nexus to the price of delivery.

As a result, the issue has catalyzed those for and against the minimum wage law into action. Lobbying of the council by the companies has been consistent at the same time labor unions have demanded its preservation.

Nelson on Thursday apologized to her colleagues for taking up such a hot political topic, but said she felt a “moral obligation” to revisit the law based on the feedback she’s heard from drivers and restaurants.

“There are national implications that will ensue based on what happens here,” she said.

Seattle’s new wage standard, which took effect in early January, requires the companies to pay at least 44 cents per minute, plus 74 cents per mile during orders, or a minimum of $5 per order — intended to at least match and possibly exceed the city’s minimum wage.

The debate over its repercussions has unfolded in something of a black hole. Companies such as Instacart and DoorDash have said the cost has forced them to layer on additional fees. Demand and tips have suffered as a result, a sentiment echoed in surveys and anecdotal stories from drivers and restaurants.

But the companies have also refused to release internal data, making it impossible to check their claims. Advocates who pushed for the initial law have cried foul, arguing the companies have used the cover of the wage law to smuggle in the fees.

“What’s really clear now is that this proposal denies gig workers a minimum wage,” said Hannah Sabio-Howell, communications director for the labor-backed Working Washington.

Nevertheless, Nelson and the new council have concluded the law needs fixing.

Her proposal, pieced together over weeks of negotiations with the companies and an industry-backed drivers’ group, Drive Forward, would cut the hourly rate to roughly 33 cents per minute and 35 cents per mile, below the IRS’s per-mile reimbursement rate for vehicle wear and tear of 67 cents. In place of the $5 per trip minimum, companies would calculate hourly pay on a weekly basis, topping up drivers who earned less than $19.97 for each hour worked. The bill would also make it so drivers would not be paid for trips canceled by the customer.

The bill would also return more power to the companies, allowing them to more easily limit worker access to the platforms, limit hours, garnish tips and more. It also eliminates drivers’ ability to sue the companies over alleged labor violations.

The proposal also limits the amount of information companies have to provide to drivers and customers, including about the location of a delivery that some drivers might take into consideration when deciding whether to accept an order. The Office of Labor Standards would no longer have the authority to demand certain records from companies.

Gig companies applauded the proposed law Thursday. A DoorDash spokesperson called it “a promising step” and a spokesperson for Instacart said the company “supports the pragmatic approach” by the new council.

The tension over the current wage requirements hinges on whether the new minimum wage is actually leading to higher pay for drivers.

Andi Honer, who’s been delivering for six years, says no. When the law took effect in January, she saw her earnings drop in half. Though she was making more per trip, she was getting fewer orders and smaller tips.

Since then, her earnings have rebounded slightly, but are still below what she made the year before.  

“Before, I was making $3 on an order, and now I’m making $8 on an order, but after 40 hours of work I’m making half the amount I was making before,” she said.

Tips, in particular, have disappeared: They once accounted for more than half of her earnings, but now customers are plowing that money into service charges.

Although Honer can’t draw a direct causation between her earnings and the new law, she feels confident the dip is more than seasonal. She always believed the companies were underpaying their drivers and supports a minimum wage, but supports revising the law.

“The minimum amount needed to be increased, but the amount of increase, I think that was probably way too high,” she said.

Andy Kim, on the other hand, said he’s easily making more than he did before. Although he was initially skeptical of the law, he prefers the higher base pay to depending on tips and has managed to maintain a steady stream of orders by working for multiple platforms at once. Changing the law doesn’t make sense to him.

 “Their whole logic is they want drivers to make more money,” he said. “I feel like that’s BS because I’m already making way more money.”

During negotiations over the law, the companies wanted to eliminate mileage reimbursements altogether, as well as all provisions forbidding retaliation, said Michael Wolfe, head of Drive Forward, a driver organization that receives money from app companies.

Wolfe does not support such dramatic changes. To preserve a mileage reimbursement, Wolfe agreed to a lower hourly rate, as well as the removal of the private right to action.

“When you’re put in a room with the council president, yourself and all of the companies to negotiate, that’s a difficult room to be in,” he said.

He loosely supports the bill as it’s written now, but favors studying its ramifications in the coming months.

Working Washington spokesperson Sabio-Howell said it’s too early to be talking about changes to the law. She acknowledges some drivers have had a bumpy few months, but she blames the companies for imposing the new fees.

“It’s a huge and obvious mistake to take the corporations at their word when they say dropping workers back to sub-minimum wage is better for workers, better for customers and better for restaurants,” she said.

Following Thursday’s committee meeting, the council will consider amendments on May 9 with a tentative final passage date of May 21.