In a significant move, a new law providing minimum pay for drivers working with delivery apps like DoorDash and Instacart came into effect in Seattle on Saturday. The law, passed by the City Council in 2022, aims to enhance wages for gig workers. While Seattle Mayor Bruce Harrell applauds the measure, app companies are strongly criticizing it, citing potential fee hikes for customers.
Designed to ensure that workers delivering meals, groceries, and packages through apps earn at least Seattle’s minimum wage, the law mandates app companies to pay a minimum of 44 cents per minute plus 74 cents per mile during orders (or $5 per order if the amount would be less). The standard minimum wage of $19.97 per hour for employees at large companies in Seattle hasn’t directly applied to delivery-app drivers, who are often treated as independent contractors.
According to the city, many thousands of people are employed through apps in Seattle.
The council members who initially championed the “Pay Up” law, Lisa Herbold and Andrew Lewis, are no longer in office. Despite their absence, Mayor Harrell celebrated the law’s implementation, emphasizing the critical role gig workers play in Seattle’s economy and asserting that the policy will provide the stability needed for their success.
Steven Marchese, the director of the Seattle Office of Labor Standards, deemed the law “an important step forward” in the city’s efforts to establish a gig economy that benefits businesses, workers, and consumers alike.
However, major delivery-service companies are expressing dissatisfaction with the new law. In recent announcements, several companies, including Instacart and DoorDash, criticized the city and revealed upcoming changes to their apps. Instacart informed customers that the law would compel them to pay drivers over $26 per hour during orders, hinting at potential new fees. DoorDash echoed similar sentiments, anticipating negative impacts on drivers, businesses, and customers.
As a response, Instacart and DoorDash have restricted customers outside Seattle from ordering from businesses within the city. Uber Eats customers in Seattle will now face a new $5 local operating fee and an increased service fee, as confirmed by a spokesperson for Uber. Last month, Shipt, a smaller rival of Instacart owned by Target, announced a service pause in Seattle due to the city’s new rules.
It’s worth noting that drivers for ride-hail apps like Uber and Lyft in Seattle and other parts of the state already have minimum-pay rights under separate legislation.