Governor Jay Inslee recently signed Engrossed Substitute House Bill (ESHB) 2076 into law, making Washington the first state to require minimum per-trip payments, paid sick leave, and workers’ compensation benefits for rideshare drivers. The law also provides drivers will remain classified as independent contractors—not employees—and expressly forbids local governments from imposing new regulations on transportation network companies.

Law’s Requirements

EHSB 2076 defines a transportation network company as “a corporation, partnership, sole proprietorship, or other entity that operates in this state, and uses a digital network to connect passengers with transportation network company drivers to provide prearranged rides.” The new law includes the following requirements:

Minimum per-trip payments. Beginning December 31, 2022, transportation network companies must ensure a driver’s total compensation is (1) at least $0.59 per passenger platform minute and $1.38 per passenger platform mile or (2) a minimum of $5.17 per dispatched trip, whichever is greater, for all dispatched trips originating in cities with populations over 600,000, such as Seattle.

For dispatched trips originating outside of Seattle, the companies must ensure a driver’s total compensation is (1) at least $0.34 per passenger platform minute and $1.17 per passenger platform mile or (2) a minimum of $3.00 per dispatched trip, whichever is greater.

Paid sick leave. Beginning January 1, 2023, transportation network companies must pay drivers for earned paid sick time consistent with Washington’s paid sick leave law. Drivers will accrue one hour of earned paid sick time for every 40 hours of passenger platform time worked. For each hour of paid sick time used, they must be paid their average hourly compensation.

Additionally, the companies must establish a system for drivers to request and use earned paid sick time. They may use the accrued time upon recording 90 hours of passenger platform time.

Workers’ comp coverage. Beginning January 1, 2023, the Washington State Department of Labor and Industries will assess transportation network companies’ compensation coverage premiums for drivers.

Driver resource center. The statute creates a new resource center to provide services to gig economy drivers, including representing them in deactivation appeals proceedings and providing “culturally competent driver representative services, outreach, and education.” Beginning July 1, 2024, transportation network companies must collect and remit a $0.15 per trip fee to the driver resource fund to support the driver community.

Additional Protections

The new law sets several statewide regulations for transportation network companies and requires them to adopt nondiscrimination policies and provide drivers with written notice of their rights. In addition, the statute prohibits the companies from (1) interfering with, restraining, or denying the exercise of any right created by the law or (2) taking adverse action against a driver for exercising a right. It also creates a process for investigating retaliation complaints.

Furthermore, the law expressly preempts the field of regulating transportation network companies. It states, “No county, city, town, or other municipal corporation may regulate transportation network companies or drivers, or impose any tax, fee, or other charge, on a transportation network company or driver.”

Takeaways for Employers

To avoid penalties, transportation network companies with drivers in Washington should become apprised of the statute’s new requirements. Although the law’s effective date is June 9, 2022, many key provisions don’t take effect until the beginning of 2023.

Employers that provide rideshare services to employees in Washington will likely experience increased costs once the statute takes effect. If you have any questions or concerns about the new law, you should consult with trusted legal counsel.

Emily A. Bushaw and Samuel N. Jackson are attorneys with Perkins Coie LLP in Seattle, Washington. Emily focuses on employment litigation, arbitration, and counseling. Her experience includes defense of discrimination, harassment, retaliation claims, wage-and-hour class actions, whistleblower, trade secret, and non-competition claims. Samuel represents clients in all aspects of labor and employment litigation in courts, administrative proceedings, and labor arbitrations. He has also handled matters before the National Labor Relations Board, the U.S. Equal Employment Opportunity Commission and state agencies.  You can reach them at ebushaw@perkinscoie.com or sjackson@perkinscoie.com.