As independent contractors, gig workers like delivery drivers are responsible for significant work expenses, and extra unpaid work time, that employees do not incur. This means contractors’ hourly gross minimum wage for “engaged” time — the time they spend on deliveries from acceptance to completion — must be set at a higher rate than employee minimum wage in order to ensure minimum wage after accounting for additional work time and costs.

The proposed pay cut in CB 120775 would result in net pay of $13.17/hour —more than $6 below Seattle’s minimum wage

Both Seattle’s existing gig worker pay law (PayUp) and the Uber/DoorDash proposal put forth by Council President Sara Nelson (CB 120775) pay an hourly rate on “engaged” work time, and a per-mile rate on “engaged” miles — that is, the time and miles spent actively running deliveries. PayUp accounts for the extra time and expenses borne by contractors by paying a higher rate for this “engaged” time, resulting in net pay roughly equivalent to minimum wage. By contrast, CB 120775 fails to account for the additional time and costs borne by contractors — and as a result, would set a sub-minimum wage for gig workers.

Under CB 120775, workers would earn just $19.97/hour during engaged time, and 35 cents per mile driven during engaged time. To examine what real pay for a gig worker would look like under CB 120775, we’re analyzing how the proposal would pay for a real sample shift on DoorDash that includes 5 hours of engaged work time and 32 engaged miles.


How CB 120775 delivers sub-minimum wages:

Digging into the numbers: Why CB 120775 pays only $13.17/hour

When accounting for the net pay earned by gig workers as compared to employees, it’s necessary to account for both the additional expenses contractors bear as compared to employees, and the extra time contractors spend on their work when not directly engaged in a specific job. Delivery drivers pay for mileage costs, self-employment taxes, and other significant costs not covered by employees. Additionally, they are paid only for the “engaged time” they spend directly working on a delivery. All their other work time — including relocating to “hotspots,” returning from deliveries, reviewing offers, and administrative time — is not directly paid for. For all of these reasons, contractors’ gross pay on engaged time must be high enough to cover their additional mileage and self-employment costs, and the additional time they spend working between deliveries.


Under the proposed pay cut, the gross pay for this typical shift would be:

$99.85 for time (5 hours of engaged time, at a rate of $19.97 per hour); and

+ $11.20 for miles (32 miles on engaged time, at a rate of $0.35 per mile); for a total of

= $111.05 in gross pay before accounting for additional mileage, expenses, and time.

Pay after accounting for the cost of mileage

Factoring in only the cost of “engaged” mileage at the IRS rate provides a conservative estimate of vehicle expenses paid by workers. In reality, the cost of mileage for gig workers is higher than the cost of engaged miles at the IRS rate alone, due to two factors: 1) Gig workers drive additional work miles between jobs — for example, relocating to “hotspots” or returning from a delivery. 2) Personal auto insurance does not cover workers on all their work miles, and workers must pay extra for “rideshare” insurance policies. But for the purpose of providing a conservative estimate of the impact of mileage costs on net pay, we will calculate mileage costs here using only engaged miles multiplied by the IRS reimbursement rate — the gold standard for determining the typical cost of using a personal vehicle for business purposes.

$111.05 in total gross pay for shift

- $21.44 in mileage costs (IRS rate of $0.67/mile x 32 miles)

= $89.61 in pay after accounting for mileage.

Pay after accounting for self-employment expenses

After factoring in the additional expenses covered by typical employers but not by app companies like Uber and DoorDash, workers’ net pay for the shift is even lower. These expenses are the “employer share” of various payroll taxes, and other expenses borne by independent contractors that would be covered by conventional employers. Accounting for federal employer-side payroll taxes, and statewide averages of the cost of other basic work expenses that would be covered by employers, works out to 11.8% of pay.

$89.61 in pay after accounting for mileage

- $10.57 to account for self-employment expenses of 11.8%

= $79.04 in net pay after accounting for expenses and mileage.

Hourly pay after accounting for additional work time between deliveries

After accounting for these basic expenses, the worker’s net hourly pay for 5 engaged hours of work would be $15.81/hour — more than $4/hour less than Seattle’s minimum wage. However, even this figure does not accurately capture how low workers’ net pay would be after accounting for all their work time. Workers put in significant work time between their “engaged” time spent on deliveries, and this additional time must also be accounted for when calculating a worker’s net hourly pay.

To estimate the additional time spent working outside this shift’s 5 hours of engaged time on deliveries, we can conservatively assume a total of one hour of “non-engaged” work time dispersed throughout the day — for example, time spent reviewing offers, traveling to “hotspots” for more offers, communicating with app support, and other such additional work time. In reality, the amount of “non-engaged” work time is typically much higher: based on the study used to set NYC’s pay standard, a shift with 5 hours of engaged time would require on average over 7 hours of total work time, resulting in a much lower net hourly pay calculation. But in order to provide the most conservative possible estimate here, we will assume a typical shift with 5 hours of engaged time involves just 1 additional hour of work time, for a total of 6 work hours.

$79.04 in net pay

÷ 6 hours of total work time

= $13.17/hour in net pay after accounting for contractors’ extra costs and work time.

Simply paying gig workers the same gross minimum wage as employees, with no accounting for contractors’ additional expenses or additional unpaid work time, results in net pay far below minimum wage. That’s why a proposal like CB 120775, which pays gross minimum wage on engaged time only and reimburses mileage at a rate well below the IRS rate, results in net pay of just $13.17/hour — $6.80 less than Seattle’s minimum wage.

PayUp is not unique in its accounting for contractors’ extra time and expenses. In fact, every existing city or state pay standard for app-based workers in the U.S. acknowledges these extra costs and hours by setting a rate higher than minimum wage for engaged time, including:

If CB 120775 were to pass as written, with pay of only gross minimum wage on engaged time and a mileage reimbursement of $0.35/mile, it would be the lowest of all existing standards for gig workers in the country.


Gross pay & net hourly pay for a typical shift under PayUp vs. CB 120775

To capture the importance of paying above minimum wage on direct engaged time in order to ensure contractors earn minimum wage after accounting for all their time and costs, the following chart compares pay on the typical shift under the current minimum pay ordinance against the lower pay rates required by CB 120775.

For footnotes and a pdf format, click here.