Seattle’s Independent Contractor Protections Ordinance

Independent contractors in Seattle are now owed significantly more in the way of disclosures from the companies that hire them, and those hiring entities are now required to make timely payment to independent contractors for services rendered.

Seattle’s “Independent Contractor Protections Ordinance” (SMC 14.34) took effect September 1, 2022. The Seattle City Council passed the ordinance after finding that independent contractors face unfair challenges like working without employee protections, non-payment or late payment for their services, and a lack of communication about the terms and conditions of their work. This ordinance is the City’s attempt to help independent contractors to have “equal baseline rights.”

When an independent contractor is hired in Seattle to perform services for a commercial business or activity, the “hiring entity” is now required to disclose the following in writing:

• The current date;

• The names of the independent contractor and the hiring entity along with contact information for the hiring entity;

• A description of the work to be performed by the independent contractor and a description of where the work will be performed and the regular place of business of the independent contractor or the hiring entity;

• The rate or rates of pay, including any variable pricing policy or incentive pay applicable to the offer of work, the applicable pay basis (e.g., hour, day, week, monthly, fee per project, piece rate, commission), and payment schedule; and

• Where applicable, the tips and/or service charges the independent contractor is entitled to, the typical expenses incurred in the course of work, which expenses will be paid or reimbursed by the hiring entity, and the deductions, fees, or other charges that the hiring entity may subtract from payment with accompanying policies for each type of charge.

SMC 14.34.050.

The Ordinance also requires that the hiring entity make payments to independent contractors in a timely manner. Just what constitutes a timely manner can be agreed to between the parties before the work begins, but the default timeline is for payment to be made within 30 days after the completion of the independent contractor’s services. SMC 14.34.055. Additionally, each time the independent contractor is paid, the ordinance also requires they be provided additional written notices of

• The date of payment;

• The names of the independent contractor and the hiring entity;

• A description of services covered by payment (e.g., description of the project, tasks completed, or hours worked) and where the services were performed;

• The rate or rates of pay applicable to the work, including any variable pricing policy or incentive pay, the applicable pay basis for determining payment earned during the pay period, the tips and/or service charges included, and expenses reimbursed;

• A calculation of the gross pay;

• The deductions, fees, or other charges applied that pay period; and

• A calculation of the net payment to the independent contractor after deductions, fees, or other charges.

SMC 14.34.060.

The ordinance also requires that the entity hiring the independent contractor retain records that document compliance with the ordinance for three years after the independent contractor’s services are complete. Failure to maintain such records creates a rebuttable presumption that the hiring entity did not comply with the ordinance. SMC 14.34.110. Violation of the ordinance can result in the hiring entity owing civil penalties, fines, and liquidated damages. SMC 14.34.170.

Businesses that hire independent contractors in Seattle, therefore, need to be diligent in complying with the requirements of this new ordinance and independent contractors should be aware of the new rights this ordinance affords.