Amazon not planning to add delivery fees in Seattle as new minimum wage law impacts Flex drivers

(GeekWire File Photo)

Uber, Instacart, and DoorDash made it known last week that they were adding new delivery fees for Seattle customers as a result of recently implemented minimum wage laws for gig workers.

Amazon, however, told GeekWire this week it does not expect impact on customers who get items delivered from Amazon Flex drivers that work as independent contractors and use their own vehicles.

The law, originally passed in May 2022, sets a minimum wage and other benefits for gig workers who deliver meals, groceries and packages. It was the first of several unique “PayUp” gig worker protection laws approved recently in Seattle.

Uber implemented a new $5 fee for Uber Eats orders in Seattle last weekend after the law went into effect, describing it as a “Local Operating Fee” that “helps offset the increased cost of regulations imposed on third-party delivery apps.”

Instacart and DoorDash also added new fees for orders in Seattle and tweaked certain offers for delivery workers.

“Dashers who deliver in Seattle will now earn at least $26.40 per hour, before tips, plus mileage for time on delivery — far exceeding Seattle minimum wage,” DoorDash wrote in a blog post.

In a FAQ for Amazon Flex drivers, Amazon said it will calculate pre-tip earnings after each delivery block is completed. “If your pre-tip earnings are less than the guaranteed minimum payment, we will pay you the difference automatically,” the company said.

Amazon Flex drivers make deliveries for Amazon.com and Prime Now orders, as well as grocery orders (which allow for tipping).

Theoretically and technically it may be more difficult for a company like Amazon to pass on new fees to customers as a result of the minimum wage law. Some orders are fulfilled by Amazon Flex drivers, but others are delivered by Amazon’s Delivery Service Partners that operate dark blue Amazon Prime delivery vans you’ve likely seen in many neighborhoods. Amazon also still uses UPS and USPS for some deliveries.

Last month, Target-owned delivery service Shipt said it was pausing operations in Seattle due to the recently passed labor laws.

“The City of Seattle did not pursue balanced legislation and we disagree with their approach,” Uber told customers last week. “These rules will instead lead to higher prices for consumers, fewer orders to restaurants and fewer work opportunities for delivery drivers.”

Other “PayUp” mandates include an ordinance related to the worker deactivation process and a 10-cent per-order fee approved in November that will help pay for the implementation and enforcement of the “PayUp” laws. Seattle also passed a sick leave law for delivery workers last year.

A study from the Economic Policy Institute released in 2022 found that gig workers “often are paid low wages, in some instances less than the minimum wage; they face economic insecurity at high rates; and they routinely report losing earnings because of technical difficulties with digital platforms.”

Seattle’s minimum wage is the highest in the country among large cities at $19.97 per hour for large employers.

In a statement to GeekWire last week, Steven Marchese, director of Seattle’s Office of Labor Standards, said that the PayUp laws “do not mandate any increase to customers’ prices.”

“Companies are free to decide if and how to address any increased labor costs, for example by adjusting the commission percentage they take on each order or raising prices for consumers,” Marchese said. “These laws go beyond app-based/gig workers, establishing a ripple effect to improve conditions for all, demonstrating Seattle’s commitment to a just and equitable economy and strengthening Seattle’s position as a national leader in worker protections.”