As a reminder to businesses with independent contractors performing work in Seattle, the city’s Independent Contractor Protection Ordinance, SMC 14.34, which expands protections for independent contractors, went into effect September 1, 2022.
The order applies to all hiring entities and covers any independent contractor who performs work, in whole or in part, in Seattle. Importantly, the ordinance requires companies to provide the following information to these subcontractors: written pre-work disclosures, a notice of rights, as well as detailed compensation information whenever a subcontractor treating is paid. The order also imposes new penalties for untimely payments by contractors.
Pre-work disclosures
First, the ordinance requires a hiring entity to provide certain written information to independent contractors before the contractor performs work. These disclosures are intended to summarize the scope of work for which the contractor has been hired, including the following information:
- date of disclosure;
- names of parties;
- contact details of the recruiting entity (including physical address, mailing address, telephone number and email address, if applicable);
- job description;
- the place(s) of employment and habitual place of business of the independent contractor or hiring entity;
- the rate(s) of pay and any variable/incentive pay conditions;
- basis of remuneration (hour, day, piece rate, etc.);
- tip/service charge allocation policy, if applicable
- typical expenses that would be incurred by the independent contractor, specifying which, if any, are reimbursed by the hiring entity;
- any deductions, fees or charges that the Hiring Entity may subtract from payment to the Independent Contractor, and the policies for each type of deduction; and
- payment schedule.
These disclosure requirements may be satisfied by including the information required in an independent contractor, consulting agreement, or other similar agreement, as long as the agreement is executed before services begin. Alternatively, a hiring entity may use the disclosure template published by the City of Seattle.
Contractors who had already started performing work before September 1, 2022 must receive these written disclosures by September 30, 2022, if they had not already received them.
Notice of Rights
Second, the hiring entity is required to provide each independent contractor with notice of the rights established by the order. Similar to pre-work disclosures, contractors hired on or after September 1, 2022 should receive this notice before work begins, and contractors who began providing services before this date should receive this notice on their next date. pay, but in no case. no later than September 30, 2022.
Timely payments and detailed payment disclosures
Third, the order requires a leasing entity to provide timely compensation for work performed, either as provided for in the terms of the contract or, if payment terms are not specified in the contract, no later than 30 days after completion of work.
At the time of each payment, the hiring entity must include a written disclosure with detailed payment information, including the following:
- Date;
- names of parties;
- description of the services covered by the payment;
- location(s) of the services covered by the payment;
- the rate(s) of pay and any variable/incentive pay terms applicable to the work covered by the payment;
- pay basis (hour, day, piece rate, etc.) with accounting methods for determining payment earned during the pay period;
- tip compensation and/or apportionment of service charges, if applicable;
- expenses reimbursed, if applicable;
- gross payment;
- deductions, fees or other charges, if any; and
- net payment after deductions, fees or other charges.
Hiring entities may provide this information in any form they choose, including the model detail form published by the City of Seattle.
Offenses
A rental entity that violates the order will be liable for full payment of any unpaid compensation with interest and may be subject to civil penalties and fines. The Office of Labor Standards has the authority to administer and enforce the ordinance and will promulgate administrative rules and create disclosure and notice templates by September 1, 2022.
Next steps
Companies that engage independent contractors to provide services in the City of Seattle should work with an attorney to update their standard agreements to include all required information disclosures, develop compliant payment detail forms, and ensure the timely delivery of rights notices and information disclosures to all current and future independent contractors.
