Seyfarth Synopsis – On September 1, 2022, a City of Seattle ordinance will go into effect providing protections to persons and entities engaging as independent contractors within City limits.
Overview of Ordinance
On September 1, 2022, the City of Seattle's “Independent Contractor Protections Ordinance” ( SMC 14.34) (the “Ordinance”) takes effect.
The Ordinance requires covered hiring entities (broadly defined as any person or business “regularly engaged in business or commercial activity”, including nonprofits) to provide independent contractors with certain disclosures (i) prior to entering a contract; and (ii) at the time of payment. The Ordinance also requires covered hiring entities to provide timely payment to independent contractors and creates a cause of action for retaliation.
Notably, the Ordinance also creates a series of rebuttable presumptions in favor of independent contractors. For example, without the required pre-contract disclosures, if the independent contractor performs the agreed-upon work, a rebuttable presumption arises that the independent contractor's terms and conditions of the relationship govern. If a hiring entity fails to retain specific records, there is a rebuttable presumption that the entity violated the Ordinance. Most importantly, if a hiring entity takes an adverse action against a person within 90 days of the person's exercise of rights under the Ordinance (including asking for a written statement of pay), it creates a rebuttable presumption of retaliation.
Required Disclosures
Under the Ordinance, Seattle will require the following pre-contract disclosures to any independent contractor:
- The date;
- The independent contractor's name;
- The hiring entity's name and contact information;
- A description of the work to be done;
- The location of the work to be done;
- The rate or rates of pay;
- The pay basis;
- A description of the tip and/or service charge distribution policy;
- A statement of any expenses of the job that are reimbursed by the hiring entity;
- A statement of any deductions, fees, or other charges the hiring entity may subtract from payment and accompanying policies for each type of charge (if applicable);
- The payment schedule; and
- Any other information required by the Director of the City of Seattle's Office of Labor Standards (please note: as of the time of publication, the administrative rulemaking process is ongoing).
In addition, at the time payment is made, the entity must disclose:
- The date;
- The independent contractor's name;
- The hiring entity's name;
- A description of the services covered by the payment;
- The location of services covered by the payment;
- The rate or rates of pay;
- A statement of tips, compensation and/or service charge distributions;
- The pay basis;
- A statement of any expenses reimbursed;
- The gross payment;
- The deductions, fees, or other charges;
- Net payment after deductions, fees, or other charges; and
- Any other information required by the Director of the City of Seattle's Office of Labor Standards (please note: as of the time of publication, the administrative rulemaking process is ongoing).
Timely Payment
In addition to the disclosures, hiring entities must provide timely payment to independent contractors, which means:
- Pursuant to the terms of the contract;
- Pursuant to the terms of the pre-contract disclosure; or
- Within 30 (thirty) days of the independent contactor's completion of services under the contract.
Partial Exclusion for Transportation Network Company Drivers
The Ordinance's disclosure requirements -- and only the disclosure requirements -- do not apply to transportation network company (e.g., Lyft, Uber, etc.) drivers; however, all other provisions of the Ordinance (e.g., timely payment, anti-retaliation) do apply.
Recommendations
If your business hires contractors in the City of Seattle (or workers you have reason to believe perform work in the City of Seattle), you will be responsible for complying with the Ordinance on September 1. Because of the broad protections to contractors built into this ordinance, it will be important to ensure that your disclosures and record keeping are accurate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
