Attorney Harrison Oldham

In a growing trend of increasing workplace protections for independent contractors, the Seattle City Council passed the “Independent Contractor Protections Ordinance,” (the “Ordinance”), which, as of September 1, 2022, will increase pay transparency for the ever-growing contractor workforce.  In this article, we will briefly review some of the essential elements of the Ordinance.

Who is Covered?

The Ordinance broadly applies to “hiring entities,” which generally includes any person or entity that hires an independent contractor, that provides services in Seatlle, including not-for-profit organizations.

Additionally, under the Ordinance’s broad definitions, a covered contractor is any self-employed person who:

Has no employees;
Performs services in whole or in part in Seattle; and
Will receive, or can reasonably expect to receive, at least $600 in total compensation from the hiring entity during a year.

However, the Ordinance excludes:

Lawyers;
Workers whose relationship with the hiring entity is limited to a property rental agreement (such as a barber who rents a booth at a salon); and
Other classes of independent contractors excluded by the Director of the Office of Labor Standards.

Pre-work Written Disclosure

The Ordinance has multiple requirements.  However, the first requires a hiring entity to provide a contractor with a pre-work written disclosure identifying specific terms and conditions before beginning work.  The required information includes:

Date of disclosure.
Name of the independent contractor.
Name of the hiring entity.
Contact information for the hiring entity, including but not limited to physical address, mailing address, telephone number and/or email address, as applicable.
Description of work.
Location(s) of work and regular place of business of independent contractor or hiring entity.
Rate(s) of pay.
Pay basis (e.g., hourly, daily, weekly, monthly, fee per project, piece rate, commission).
Tips and/or service charge distribution policy, if applicable.
Typical expenses incurred in the course of work, and which expenses will be paid or reimbursed by the hiring entity, if applicable.
Deductions, fees, or other charges that the hiring entity may subtract from payment and accompanying policies for each type of charge, if applicable.
Payment schedule.

If an existing agreement, such as a written contract between the parties, already contains the elements listed above, no separate pre-work written disclosure is necessary. However, if any information is missing, the hiring entity should prepare a document containing the missing information so that the contractor may locate all the information needed in a single document.

Notice of Rights

Second, the Ordinance requires hiring entities to provide workers notice of their rights before they begin work. The notice must include:

The rights to pre-contract disclosures, timely payment and payment disclosures;
The right to be protected from retaliation; and
The right to file a complaint or bring a civil action for a violation of the Ordinance

Payment Disclosures

Finally, the Ordinance requires hiring entities to provide certain disclosures each time they pay the contractor for services.  Each disclosure must include:

Date of disclosure.
Name of independent contractor.
Name of hiring entity.
Description of services covered by payment (e.g., description of project, tasks completed or hours worked).
Location of services covered by payment.
Rate or rates of pay.
Tip compensation and/or service charge distributions, if applicable.
Pay basis (e.g., hourly, daily, weekly, monthly, fee per project, piece rate, commission), with accounting of method(s) for determining payment earned during the pay period.
Expenses reimbursed, if applicable.
Gross payment.
Deductions, fees or other charges, if applicable.
Net payment after deductions, fees or other charges.

In addition, the Ordinance requires covered hiring entities to pay contractors:

Per the terms of any contract between the parties;
Per the terms in the pre-work disclosure; or
Within 30 days after the contractor completed the services

Other Requirements, Retaliation Protections, and Violations

Hiring entities must keep electronic or hard copy records documenting compliance with the Ordinance for three years. Any hiring entity that fails to retain the required records will be subject to a presumption that the entity violated the Ordinance’s recordkeeping requirements.

Contractors also are protected from retaliation for exercising rights protected by the Ordinance and may file a complaint in response. For example, the guidance suggests that protected activity includes making inquiries about or informing others about their rights under the Ordinance, informing the hiring entity, or filing a complaint alleging a violation of the law. Significantly, the Ordinance also creates a rebuttable presumption of retaliation if a hiring entity takes adverse action against a contractor within 90 days of a contractor’s protected activity.

Hiring entities violating the law may be subject to payment of unpaid compensation, liquidated damages, civil penalties, fines, and interest.

Next Steps

Employers who engage independent contractors to perform services in Seattle should:

Update any independent contractor agreements and payment forms with the required information;
Distribute the required notices as appropriate; and
Review their policies and practices for hiring independent contractors to ensure compliance with the Ordinance.

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About Harrison Oldham

Harrison grew up in Mansfield, Texas. He attended Texas A&M University for his bachelor’s degree, where he met his wonderful wife, Kelsey. After graduating magna cum laude from Texas A&M, he attended SMU Dedman School of Law, graduating with honors in 2012. Today, Harrison and his wife live in Dallas, Texas with their son, Teddy.

Since graduating from SMU Law, Harrison has worked exclusively in the field of business law. He has spent time in private practice and in-house, working with clients of every size; from single person startups to Fortune 250 companies. Today his practice focuses on serving the diverse needs of businesses and individuals throughout Texas. You can learn more about Harrison by visiting his website, at: http://lonestarbusinesslaw.com/.

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