On Tues., Sept. 29, Seattle’s city council passed a law to ensure that rideshare drivers for companies like Uber and Lyft would earn the city’s minimum wage of $16.39 per hour. The new law will take effect in January.
How does the new law in Seattle affect Uber and Lyft?
The Seattle Times reported that the new rates will have to cover “a wide range of expenses” including time waiting for passengers and time driving to pick up passengers. Uber and Lyft drivers have in the past been classified as independent contractors, which means working without a guaranteed minimum wage or other benefits.
The ordinance’s intent is to improve employment conditions for gig workers who have suffered due to COVID-19. Seattle Mayor Jenny Durkan said (via NYT), “The pandemic has exposed the fault lines in our systems of worker protections, leaving many frontline workers like gig workers without a safety net.”
Other cities and states have passed measures to protect and improve wages of independent contractors. Seattle’s decision was guided by New York’s similar legislation of 2018. California has taken the charge further by requiring the ridesharing companies to classify drivers as employees.
The new legislation passed unanimously in a 9-0 vote. Some factors that are included in the council’s new legislation are per-mile and per-minute rates for drivers that account for down time and incurred expenses. It also requires drivers to earn a minimum of $5 per trip on most trips.
Engadget reported that, under the new law, Lyft and Uber must also hand all tips to their drivers, which do not count toward the minimum wage. The companies must also reimburse drivers for masks and other PPE.
The Seattle Times said the legislation assumes certain expenses drivers incur, including $8,000 yearly for vehicle payments; $2,000 for maintenance and repairs; $1,600 for cell phone expenses; and $3,800 for medical, dental, and vision insurance.
This legislation may have a ripple effect on other independent contractors. Seattle City Council member Lisa Herbold noted (via Engadget) “I hope in the future we can work on similar legislation for other drivers … such as delivery drivers of packages as well as delivery drivers of meals and food.”
Uber and Lyft's response to the Seattle law:
Representatives of Uber and Lyft have expressed disapproval of the wage requirement. Uber’s recent statement decried the New York policy as having “resulted in a 20 percent price increase for riders and lost earnings opportunities for thousands of drivers.”
Lyft spokesman CJ Macklin tells the NY Times, “The city’s plan is deeply flawed and will actually destroy jobs for thousands of people — as many as 4,000 drivers on Lyft alone — and drive ride-share companies out of Seattle.”
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Lyft stock price was $27.82 per share as of 11:45 a.m. Sept. 30.