On September 1, 2022, the City of Seattle will have a new ordinance regrading independent contractors. The new law, labeled the Independent Contractor Protection Ordinance (ICPO), is designed to protect independent contractors from delayed payment and help them receive greater information about the terms and conditions of their work. The ordinance only applies to independent contractors providing services within Seattle. The following answers some of the most frequently asked questions on the ICPO.
Who is an “Independent Contractor”?
An independent contractor is a self-employed person (or business entity composed of only one person) that is hired by a hiring entity to provide services in exchange for compensation. Independent contractors are not employees. The ICPO does not apply to:
- Workers who only lease workspace from a hiring entity, or
- Contractors who have employees.
What Hiring Entities Does the Law Apply To?
The new ordinance applies to any entity that hires a contractor to provide any service to either the entity or a third party. In particular, an “entity” may include a:
- Nonprofit organization, or
- Other similar hiring entity.
Does the Ordinance Apply to All Services?
No. The services covered under the ICPO must satisfy two requirements. These are:
- The services must be performed in whole or in part in Seattle, regardless of where the hiring entity is located, and
- The proposed or actual compensation payable to the contractor must be $600 or more, either by itself or when combined for other services provided by the contractor during the same calendar year.
What does the ICPO mandate?
The new ordinance essentially requires a hiring entity to do four important things with regards to independent contractors. These are:
- Before a contractor begins work, the entity must provide the contractor with information in writing on the terms and conditions of work.
- Entities have to pay contractors in a timely manner. This means either on or before the date compensation is due as provided in the contract, or within 30 days of completion of services.
- When payment is made, the entity has to provide contractors with itemized payment information in writing.
- Entities have to provide contractors with a written notice of their rights. These include the right to disclosures, no retaliation, and rights of action for violations of the ICPO.
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