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Employment Law ALERT – New Seattle Independent Contractor Protections (ICP) Ordinance

Worker holding portfolio
Posted on August 29, 2022 by James Blankenship

For any business who uses independent contractors or has plans to hire an independent contractor who will be performing work in Seattle, an ordinance taking effect on September 1, 2022, impacts what information you must provide to the independent contractor at the start of the engagement and with each payment. The ordinance includes nearly every independent contractor with any contact to Seattle, excluding only those transiting the City.[1]

Pre-Contract Disclosure: Prior to beginning work, an independent contractor must be provided with a pre-contract disclosure that includes: the names of the parties, contact information for the hiring entity, description of work, location of work, rate, basis, the schedule of pay including any incentives and deductions, typical expenses incurred and if those expenses will be reimbursed, and the tip policy if applicable. Failure to comply with the required notice can subject the hiring entity to statutory penalties, fines, and an award of costs and attorney’s fees to the City. The pre-contract disclosure must be provided in single document, but no specific form is required. The City of Seattle has provided a form that lacks substantive terms and protections that we recommend when retaining an independent contractor. If you have questions about your current independent contractor agreements, we recommend that you contact the Lasher Labor & Employment Team to review for compliance.  Additionally, the disclosure must be provided in English and the primary language of the independent contractor. For any independent contractor engaged prior to September 1, 2022, the require disclosure must be provided by September 31, 2022, or the date of compensation, whichever comes first.

Payment Disclosure: For each payment made to an independent contractor the hiring entity must provide a payment disclosure that includes: the names of the parties, description and location of the services covered by the payment, rates of pay and incentives, tip compensation, pay basis (hour, week, piece, etc.), any reimbursed expenses, gross payment, all deductions, and net payment. Like the initial disclosure, failure to comply with the required notice can subject the hiring entity to statutory penalties, fines, and an award of costs and attorney’s fees to the City. Again, the information must be provided in a single document, but a specific form is not required. The City of Seattle has provided a sample form that can be adopted or modified to meet each entities needs so long as the essential information remains. It is important to remember that this disclosure is required with each payment.

Notice of Rights: Hiring entities must provide a written notice of rights to independent contractors before beginning work for all new independent contractors after September 1, 2022. For any independent contractor engaged prior to September 1, 2022, the Notice of Rights must be provided by the earlier of September 31, 2022 or the next payment of compensation. The notice must provide information on the required disclosures, rights under the ordinance including protection from retaliation, and information about filing a complaint with the Office of Labor Standards. The City of Seattle has provided a model notice that is a single page and straightforward. It is recommended that hiring entities use the model notice or take the substantive material verbatim for their own notice.

Compliance and Remedies: The ordinance requires hiring entities to maintain records of compliance for three years or be subject to the presumption of a violation. Like other worker protection laws, the ordinance includes a broad prohibition on retaliation for exercising rights under the ordinance. The Office of Labor Standards has the power to investigate and enforce the ordinance. Enforcement actions include civil penalties, fines, liquidated damages, and recovery of unpaid compensation with interest.

Notably, the ordinance provides for liquidated damages up to twice the amount of unpaid compensation and this is not waivable by contract.

Additionally, an award of reasonable attorney’s fees for the benefit of the City is available to the Office of Labor Standards. A private right of action was also created with the ordinance, which provides similar remedies to individual contractors and classes of contractors.

Please contact the Lasher’s Labor & Employment Team if you have questions or would like us to review your independent contractor agreements.

[1] Actual compensation must be $600 or more in the calendar year. If the relationship is in the form of a property rental agreement (for example rental of a chair in a salon) the relationship is not covered. Transportation Network Company (ride-share companies such as Uber or Lyft) drivers are excluded from the pre-contract and payment disclosures but are otherwise subject to Chapter 14.34.