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On September 1, 2022, the Independent Contractor Protections Ordinance (ICPO) will go into effect. The ICPO is designed to protect independent contractors from delayed and/or non-payments and ensure they have adequate information about the terms and conditions of their work. Under this new City of Seattle ordinance, hiring entities will be required to disclose certain information to independent contractors before contracting their services and at the time of payment. The law only applies to independent contractors rendering services within Seattle city limits.
The law is currently in its preliminary draft form, which means there may be changes before the law goes into effect in September. Below is a summary of what you need to know based on the current draft:
- What is an independent contractor and who is protected under this law? An independent contractor is a self-employed person (not an employee) hired by a hiring entity to provide services in exchange for compensation. An independent contractor can be a sole proprietor or have a legal entity such as an LLC or corporation, as long as the legal entity is only composed of one person. Excluded from the new law are attorneys, workers who only lease workspace from the hiring entity (such as hair stylists renting booths at a salon), and contractors who have employees.
- Which hiring entities are covered by this law? The hiring entities covered by this law include any individual, LLC, corporation, partnership, nonprofit organization, or any other entity that hires an independent contractor to provide any service to the hiring entity or a third party.
- What kinds of services are covered by this law? This law does not govern every kind of service performed by an independent contractor for a hiring entity. The services covered under the ICPO must satisfy both of the following requirements:
- Location of Services:
- The services must be performed in whole or in part in Seattle, regardless of where the hiring entity is located;
- The hiring entity must know or have reason to know that the services will be performed in whole or in part in Seattle; and
- The hiring entity has hired the independent contractor to provide services in the course of the hiring entity’s business or commercial activity.
- Value of Services: The proposed or actual compensation payable to the independent contractor must be $600 or more either by itself or when combined for services provided by the independent contractor during the calendar year.
- Location of Services:
- What does the new law require?
- Pre-contract disclosure: Before an independent contractor may begin work, the hiring entity must provide the independent contractor with information regarding the proposed terms and conditions of work, including the date, name and work location of the independent contractor and the hiring entity, description of the work and work location(s), compensation details and payment schedule. The information must be provided in the independent contractor’s primary language.
- Timely payment: Hiring entities are required to pay independent contractors in a timely manner, either:
- On or before the date compensation is due as provided in the contract; or
- Within 30 days of completion of services.
- Payment disclosure: At the time payment is made, hiring entities are also required to provide independent contractors with itemized payment information, including the description of services performed, location(s) of services provided, rate(s) of pay, pay basis, and other compensation, and any deductions, fees, or other charges.
- Notice of Rights: Hiring entities are also required to provide independent contractors with a written notice of their rights, including the right to disclosures, no retaliation, and right of action for violations of the ICPO.
- City of Seattle Independent Contractor Protection Ordinance website
- City of Seattle Independent contractors Protection Ordinance Fact sheet
Resources coming soon!
Coming Fall 2022, Communities Rise will have fact sheets for independent contractors and hiring entities respectively that will provide more information on the ICPO. Communities Rise will also be hosting two webinars on the ordinance in early 2023 for hiring entities and independent contractors respectively. The City of Seattle Office of Labor Standards will be available at both webinars for questions. Be sure to sign up for our newsletter or see our events page to stay in the loop about these upcoming resources and trainings. Feel free to contact us via our contact form for any additional questions.
This article is for educational purposes only. This is not meant to be comprehensive, and the content will not be considered legal, tax, or any other form of professional advice or counsel. For legal advice, contact a relevant licensed professional for your needs in your jurisdiction. This Legal Alert is dated August 16, 2022 and there may be updated information about this law after this date. This Legal Alert does not create an attorney-client relationship.