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Seattle takes first step toward regulating the gig economy, but some companies could be exempt

Seattle is one step closer to establishing minimum pay standards for app-based workers.

A Seattle City Council committee approved legislation Tuesday that would affect an estimated 40,000 gig workers for companies like Door Dash or Instacart. But the policy would exempt some types of app-based companies.

An amendment by Councilmember Alex Pedersen excludes so-called marketplace companies like Seattle-based Rover and Task Rabbit. He says he supports a minimum wage for gig workers. But he adds the legislation’s pay and labor standards don’t fit neatly with all app-based companies.

“Marketplace network companies who provide their brand, their customer base, their computer application technology to workers who actually set their own compensation rates, should be exempt from this experimental law so we limit unintended consequences," Pedersen said.

Councilmembers Lisa Herbold and Teresa Mosqueda opposed the amendment, calling it a loophole that would give companies incentive to tweak their business models. Herbold notes more customers have turned to app-based companies during the pandemic, but workers are not always adequately paid.

“Development of this policy is to regulate and unregulated sector of the economy,” Herbold said. “It’s the largest growing sector.”

The issue now moves on for full Council consideration on Tuesday, May 31.