Seattle expands protections for independent contractors // Cooley // Global Law Firm

Effective September 1, 2022, employers who hire independent contractors who provide services in Seattle must comply with the Independent Contractor Protection Ordinance. The order requires covered hiring entities to provide independent contractors with certain information before entering into a contract and at the time of payment, as well as a notice of duty before work begins.

Under the general definitions of the ordinance, a covered contractor is any self-employed person who:

  1. Has no employees.
  2. Provides services in whole or in part in Seattle.
  3. Will receive or can reasonably expect to receive at least $600 in total compensation from the hiring entity in a calendar year.

A covered hiring entity includes any business regularly engaged in business or commerce, including non-profit organizations. We discuss the main requirements of the order below.

Written disclosure prior to work

First, the order requires a hiring entity to provide the contractor with a written pre-work disclosure identifying certain terms and conditions before commencing work. Required information includes:

  • Date of disclosure.
  • Name of Independent Contractor.
  • Hiring entity name.
  • Hiring Entity Contact Information, including but not limited to physical address, mailing address, telephone number, and/or email address, as applicable.
  • Description of work.
  • Place(s) of work and usual place of business of the independent contractor or hiring entity.
  • Rate(s) of pay.
  • Compensation basis (e.g. hourly, daily, weekly, monthly, project rate, piece rate, commission).
  • Tip and/or service charge distribution policy, if applicable.
  • Typical expenses incurred in connection with the job, and what expenses will be paid or reimbursed by the hiring entity, if any.
  • 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 information required above, no pre-work written disclosure is necessary. However, if information is missing, the hiring entity must prepare a document containing the missing information, with supporting documents, so that all the required information can be found in a single document. Interestingly, hiring entities can provide “piecemeal notice” of any changes to up to six of the above items, but must post a revised disclosure if there are changes to more than six items.

Job descriptions are essential under the ordinance: The Seattle Office of Labor Standards (OLS) notes that the job description must include “any terms and conditions that the hiring entity would require as a condition precedent to payment of the agreed work. ,” as “[a]Any terms and conditions not detailed in the Pre-Contract Disclosure may not be relied upon by the Hiring Entity as a basis for non-timely payment under the Order. »

Notice of Rights

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

  • Rights to pre-contractual disclosures, timely payment and payment disclosures.
  • The right to be protected against reprisals.
  • The right to file a complaint with OLS or bring a civil action for violation of the law.

Any contractor already working for an entity on September 1 must receive the Notice of Rights (and Pre-Work Disclosure) by the next indemnity date or September 30, 2022, whichever comes first.

Payment Disclosures

Finally, the order requires hiring entities to provide certain information whenever they provide the contractor with compensation for services. Each disclosure must include:

  • Date of disclosure.
  • Name of Independent Contractor.
  • Hiring entity name.
  • Description of the services covered by the payment (for example, description of the project, tasks performed or hours worked).
  • Location of services covered by the payment.
  • Rate or rate of pay.
  • Tip compensation and/or apportionment of service charges, if applicable.
  • Compensation basis (eg hourly, daily, weekly, monthly, project rate, piece rate, commission), with accounting methods to determine the payment earned during the pay period.
  • Expenses reimbursed, if applicable.
  • Gross payment.
  • Deductions, fees or other charges, if any.
  • Net payment after deductions, fees or other charges.

If payment is based on the number of hours worked, a record of the hours for which payment is made may suffice. In other cases, if the pre-work disclosure provides that payments are to be made in installments based on the phases of a project being completed, the payment disclosure must identify “project stages or parts of the work described in the pre-contract disclosure” for which payment is being made.

In addition to payment disclosure, the order requires contractors to be paid in accordance with the terms of any contract between the parties, under the terms of pre-work disclosure, or within 30 days of the completion of services.

Other requirements, protections against retaliation and violations

Hiring entities are required to keep electronic or paper records of compliance with the order for three years. While these records may include disclosures, notices, and payment information, OLS notes that “[e]letters and text messages containing such disclosures or notices should also be retained as evidence that the documents were provided to the independent contractor on specific dates. Any hiring entity that fails to keep these required records is subject to a rebuttable presumption that the entity has violated the record keeping requirements of the order.

Contractors are also protected from retaliation for exercising rights protected by the order and can file a complaint with the OLS, which administers the order. For example, OLS notes that protected activity includes investigating or informing others of their rights under the order, or informing the hiring entity or filing a complaint alleging a violation of the law. Potential adverse actions against a contractor include temporarily or permanently denying or limiting the contractor’s access to work, offering less desirable work, or terminating, disabling, or taking any other action. that would deter a reasonable person from exercising their rights under the order. Significantly, the order also creates a rebuttable presumption of retaliation if adverse action is taken against a contractor within 90 days of a contractor’s protected activity.

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

Next steps

Employers who hire independent contractors to provide services in Seattle must update all independent contractor agreements and payment forms with the required information. Employers must also distribute required notices, where applicable. Employers may use the OLS pre-employment disclosure, notice and payment documents, but are not required to do so. In addition, employers should review their policies and practices around hiring independent contractors to ensure compliance with the order.

If you have any questions about the ordinance, please contact a member of the Cooley Employment Group.

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