How the PayUp policy ensures gig workers are paid at least minimum wage after expenses for all time worked
Right now, companies like DoorDash and Uber Eats use black-box algorithms to set pay rates, frequently as little as $2 or $3 for a job — so low that workers can end up with negative pay after accounting for expenses. The PayUp policy proposal would eliminate subminimum wages in Seattle's gig economy by requiring every job to meet a per-minute and per-mile pay floor, which ensures workers are paid at least minimum wage after expenses for all time worked.
How the pay floor works
The policy establishes a clear and simple standard:
each job would have to pay at least 39¢ per minute and 73¢ per mile for “engaged time,”
which is the time from when a worker accepts or starts a specific job until it’s completed. The pay floor for engaged time accounts for baseline minimum estimates of the additional costs contractors have to cover, like payroll taxes. It also accounts for the additional time required to do work that is not attached to any specific job, like time to review offers before accepting or rejecting.
Pay for engaged time:
28.8¢ / minute
Minimum wage for direct work time ($17.27/hour)
+ 10.2¢ / minute
Associated costs & time
= $0.39¢ / minute*
100%
of Seattle’s minimum wage
+ 13%
for Associated Costs
+ 21%
for Associated Time
~135%
of minimum wage
Compensation for engaged miles:
58.5¢ / mile
IRS standard mileage rate
+ 14.5¢ / mile
Associated mileage costs
= $0.73¢ / mile*
100%
of IRS rate
+ 25%
for Associated Mileage
= 125%
of IRS rate
This pay floor — about 135% of the employee minimum wage and 125% of the IRS rate — ensures app-based workers are paid at least the equivalent of minimum wage after expenses, just like other Seattle workers. The standard is designed to not require complex calculations or detailed time tracking, and works with a wide array of different business models. App companies can continue to adjust rates for each offer based on demand, as long as they ensure every job pays at least what is required by the per-minute and per-mile pay floor: 39¢/minute + 73¢/mile.
How the “associated factors” ensure a minimum wage
By basing minimum pay rates on engaged time, the PayUp policy sets a clear standard that can be implemented in the gig economy’s unique work structure. However, engaged time and miles represent only a portion of the total time and miles required of workers. Additionally, a number of costs borne by contractors aren’t reflected in Seattle’s minimum wage. The PayUp standard uses these associated factors for costs, time, and miles to determine the amount each job must pay to ensure that workers net minimum wage for all their time worked.
Associated Costs:
In order to take home the same amount as an employee earning the minimum wage, app-based workers must earn an additional
13%
to account for the costs they cover as contractors. ● Payroll taxes: 7.65% ● Paid family & medical leave: 0.25% ● Unemployment: 1.06% ● Workers’ compensation: 2.84% ● Misc business expenses (i.e. cell phone, data, etc.): 1.2% ● TOTAL: 13% of the per-minute minimum wage for employees
Associated Time:
App-based workers are required to work a significant amount of time in addition to engaged time on specific jobs. The PayUp policy accounts for a
21%
baseline estimate of this additional required work time in addition to engaged time worked on a specific job: ● Time to review offers: 5% ● Time to availability (e.g. relocating after jobs to access new offers): 8.3% ● Administrative tasks (e.g. communicating with app support, recordkeeping): 3.3% ● Rest breaks (equivalent to paid breaks required by WA labor standards): 4.2% ● TOTAL: 21% of engaged time on a specific job
Associated Mileage:
The IRS rate of 58.5¢/mile is the national standard to account for the cost of using a personal vehicle for work. The PayUp policy uses the IRS rate to reimburse workers for mileage during engaged time, and factors in an additional 25% as a baseline minimum estimate of the additional travel, outside engaged time, that is required to do app-based work. ● Travel to locations where work is available: 12.5% ● Travel for breaks & administrative needs: 12.5% ● TOTAL: 25% of engaged miles on a specific job By applying these factors to Seattle’s current minimum wage and the IRS rate for mileage, the policy ensures workers are paid at least minimum wage, after expenses, for all their work time:
Engaged minutes
x
$0.288
x
1.13
x
1.21 = $0.39/minute Engaged miles
x
$0.585
x
1.25 = $0.73/mile