This article follows an earlier article on hazard pay located here.
Hazard pay legislation is expanding nationwide at all levels of government. The growth in calls for hazard pay is the result of a shift in perception of the types of work that should be considered hazardous. Before COVID-19, hazard pay was akin to extra incentive pay aimed at attracting more workers to take on inherently hazardous duties or work involving physical hardship.[i]
During COVID-19, the definition of hazard pay has expanded significantly to encompass work that is not typically thought of as dangerous, but that may cause a worker to be exposed to potential hazards not tied to the work itself. Food delivery drivers, grocery store clerks, security personnel, and rideshare operators were all typically considered low-risk occupations with respect to the life and health of a worker employed in those fields. Classifying those workers as “essential” however has caused them to have human interactions and possible virus exposure that others may be able to avoid by the nature of their work, or from the loss of work altogether. Under this new mindset, hazard pay is transformed from incentive to mitigation. With this reworked definition in mind, the City of Seattle enacted a first-of-its-kind local hazard pay requirement for “gig workers.”
On June 15, 2020, Seattle passed Council Bill 119799 “establishing labor standards requirements for premium pay for gig workers working in Seattle.”[ii] Seattle’s law for hazard pay, which it terms “premium pay,” requires that “food delivery network companies” pay their delivery drivers $2.50 per individual order picked up or dropped off in Seattle, and $1.25 for each additional order. The law is in effect for the duration of the civil emergency proclaimed by Seattle Mayor Jenny Durkan on March 3, 2020. The bill approved by the City Council recites that gig workers face “magnified risks of catching or spreading disease because the nature of their work can involve close contact with the public, including members of the public who are not showing symptoms of COVID-19 but who can spread the disease.”[iii]
Companies and industry groups affected by the new ordinance have filed a complaint to stop the legislation, claiming the ordinance “violates businesses’ rights under the Equal Protection and Takings clauses of the U.S. Constitution and a 2018 Washington law prohibiting local taxes on groceries,” and that the City Council exceeded the powers granted to it to protect public health. The plaintiffs also included in their complaint a concern that the ordinance allows workers to sue for violations for up to three years after the Seattle Mayor declares an end to the health emergency. [iv]
An important aspect of the Seattle ordinance is it requires payments from the employer without government subsidy, meaning it directly impacts the employer’s bottom line. Other hazard pay initiatives contemplate the use of state or federal funds to be disbursed to employers and employees. The most prominent legislation providing for taxpayer-funded hazard pay was included in the House of Representatives supplemental pandemic relief package. Entitled the HEROES Act, the bill would establish a $200 billion “Heroes Fund,” setting a $13 per hour raise for essential workers up to $25,000 for workers earning less than $200,000, and a maximum of $5,000 for workers earning more than that through the end of the year. The hazard pay would also be retroactive to Jan. 27, 2020. Under the plan, employers would be able to access the Heroes Fund to recoup hazard pay funds paid to essential workers.[v]
Vermont has enacted a similar program using funds it received from the federal government in the first stimulus round under the CARES Act. Under Vermont’s plan, covered employers may request funding from the state’s allocation of CARES Act money to provide “$1,200 or $2,000 in hazard pay to each employee who meets eligibility criteria.”[vi]
Whether the Seattle hazard pay ordinance survives the industry challenge or not, employers should be aware that their local or state governments may take similar actions as the pandemic drags on. The Seattle bill went from a proposal to a law in less than one month. The sudden imposition of additional costs impacting employer bottom lines is something about which every employer should be mindful in the months and years to come. Employers should consider how similar local bills not supported by government funds could impact their businesses and what options they have for mitigating the possible hit to their bottom line.
[i] Department of Labor Website, https://www.dol.gov/general/topic/wages/hazardpay
[ii] Office of the City Clerk, Legislative Information Center, Council Bill CB119779, https://seattle.legistar.com/LegislationDetail.aspx?ID=4543734&GUID=5FCDD9B7-3EDA-4933-9652-97EA3B42FB1F&Options=ID%7cText%7c&Search=gig+worker&FullText=1.
[iii] Id., see also Council Passes Premium Pay for Frontline Gig Workers During COVID Crisis, Council Connection Website, https://council.seattle.gov/2020/06/15/council-passes-premium-pay-for-frontline-gig-workers-during-covid-crisis/.
[iv] Daniel Wiessner, Instacart, Biz Group Challenge Seattle Law Requiring Hazard Pay For Gig Workers, June 30, 2020, https://1.next.westlaw.com/Document/I20e988d0bb1311eaaf24896a948e40a4/View/FullText.html?transitionType=SearchItem&contextData=(sc.Category)
[v] Kelly Anne Smith, Next Stimulus Package - Will Hazard Pay Be Included?, August 6, 2020, https://www.forbes.com/sites/advisor/2020/08/06/next-stimulus-packagewill-hazard-pay-be-included/#3877d887206a
[vi] Press Release: Governor Phil Scott Announces Front-Line Employees Hazard Pay Grant Program Applications to Open for Employers on August 4, Office of Governor Phil Scott, https://governor.vermont.gov/press-release/governor-phil-scott-announces-front-line-employees-hazard-pay-grant-program