Washington passes first-ever state law creating minimum pay for ride-hailing companies

Washington passes first-ever state law creating minimum pay for ride-hailing companies

Washington state on Thursday passed a law creating a minimum pay standard and benefits for drivers contracting with ride-hailing companies like Uber and Lyft, becoming the first state to establish not only an earnings baseline but also a paid sick leave policy for the independent contractors.

Govt. Jay Inslee (D) signed the bill into law on Thursday. The law takes effect in December and ensures drivers for ride-hailing services earn $1.17 per mile and $0.34 per minute. They will also earn $3 for each trip.

Drivers operating in cities with a population greater than 600,000, such as Seattle, will earn $1.38 per mile, $0.58 per minute and $5.17 per trip. Seattle passed a law in 2020 establishing minimum pay for ride-hailing workers in the city.

Washington state’s new law, however, also creates a paid sick leave policy for the gig economy workers. Starting in 2023, drivers will also accrue one hour of paid sick leave for every 40 hours worked.

The measure won support from Uber. In a Thursday blog post, Uber said the law enjoyed broad support from most of its drivers because it gives them flexibility as independent contractors while also establishing a base pay.

“This law protects flexibility and independence,” Uber said. “You can continue to drive whenever you want. It ensures no set schedules, no bumps, no punching time clocks.”

Lyft worked closely with lawmakers and a local Teamsters union to get the measure passed, according to testimony provided to the state legislature and forwarded to The Hill by the company.

“The bill ensures that we as companies are doing our part to shoulder those costs with new contributions to the state tax coffers,” said Jen Hensley, the head of government relations for Lyft, in the February testimony. “We are committed to working with legislative leadership to address those costs in a way that doesn’t overburden other parts of Washington State’s economy.”

Ride-hailing services are one of the fastest-growing gig economy jobs, but Uber and Lyft have faced controversy over how they pay independent contractors, with some criticizing them as profiting off driver labor.

The companies have been opposed to establishing a minimum wage for their workers because it would change how the service works, arguing that gig economy workers want flexibility and often drive as a side job.

California in 2019 passed a law reclassifying gig workers as employees, but ride-hailing and other delivery companies backed a 2020 ballot measure that exempted drivers from the law.

Uber, Lyft, DoorDash and other companies have also been pushing back against the federal PRO Act, which would reclassify gig workers as employees and give them the right to unionize.

Washington’s law was also supported by a local union, which worked on the legislation with state lawmakers.

Democratic state representative Liz Berry said during a committee hearing in February that “every penny” was negotiated in the bill between a local Teamsters union and the ride-hailing companies.

“Both sides would say it’s been a great effort to get where we are,” Berry said.

—Update at 7:02 pm

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