New paid family, medical leave law for rideshare drivers could increase fares

Gov. Jay Inslee on Monday afternoon signed into law a bill that makes Washington the first state in the nation to codify into law the right to paid family and medical leave for rideshare drivers.

Substitute House Bill 1570, which unanimously passed both chambers of the state Legislature, ensures that paid family and medical leave programs are funded by the companies the drivers work for. Per the law, drivers would have the right to up to 12 weeks of paid leave due to a medical event or the birth of a child.

The law also makes temporary pandemic-era unemployment benefits permanent for drivers.

“Recognizing their hours worked is a critical step to make sure they can access our state’s social safety net programs,” Inslee said from the state reception room at the Capitol Campus in Olympia just before signing the bill. “We know the nature of work is evolving and so must the programs and policies that support workers and their families.”

SHB 1570 builds on driver rights won last year with the passage of House Bill 2076, dubbed the “Expanding Fairness” bill, that guarantees benefits for drivers while still maintaining their status as gig workers and not company employees.

Under HB 2076, drivers are guaranteed benefits that include paid sick leave, a minimum pay rate, and a resource center for drivers who want to appeal their deactivation. Meanwhile, rideshare companies can’t set their workers’ schedules, and cities won’t have the power to regulate said companies.

The Center Square reached out to the two biggest rideshare companies for comment, Uber and Lyft, asking about the prospect of the 2023 law increasing rider fares.

A spokesperson with Uber sent The Center Square a statement saying the following: “We are proud to stand with Governor Inslee, Representative Berry, labor and the many drivers as the bookend, HB1570, to the historic worker bill, HB2076, is signed into law today. These coordinated pieces of legislation reflect a true compromise between state lawmakers, labor leaders and transportation network companies to afford drivers historic new benefits while protecting the independence and flexibility they say they want.”

C.J. Macklin, Lyft senior communications manager, told The Center Square via email: “This is another historic win for drivers in Washington state and is the culmination of the progress made last year with the passage of HB 2076, first-in-the-nation legislation providing drivers in Washington with numerous benefits.”

“HB 1570 would add paid family medical leave and unemployment insurance benefits to that list. These new benefits and protections are the result of legislators, app-based companies, and labor organizations listening to drivers and working together,” Macklin added.

Some transportation experts addressed the cost issue head-on.

“I think this will increase rideshare fares,” Baruch Feigenbaum, senior managing director of transportation policy at the Reason Foundation, told The Center Square. “If the companies have to pay unemployment benefits, they have to get money for those benefits from somewhere. It's unclear how much the higher costs will decrease ridership. However, it could [be] a small number of folks visiting Seattle [who] choose to rent a car, and some residents driving when they would have taken a rideshare vehicle (say to the airport).”

SHB 1570 is not good legislation in his estimation.

“I think this bill is misguided because ridesharing is most drivers' second job/part-time job,” Feigenbaum explained. “Right now, there is more demand than there are riders, so the number of unemployed has to be extremely small.”

Charles Prestrud, director of the Coles Transportation Center at the Washington Policy Center, had a similar reaction to the prospect of SHB 1570 raising prices.

“The short answer is yes,” he said in an email. “Because unemployment insurance (UI) is paid for out of employer contributions to the state UI fund this bill will raise the cost of doing business for Uber/Lyft and any other firm that provides similar services. I can't offer an estimate of how much it will raise costs and therefore the prices paid by customers because UI rates are determined by the experience of individual employers and if the rate has been set for Uber/Lyft it isn't specified in the bill.”

He noted that Uber and Lyft representatives testified in favor of the bill, explaining why that might have been the case.

“That seems like a surprise, but a close reading shows the bill isn't quite as bad as it could have been,” Prestrud said. “For instance, to be eligible, UI claimants must have worked at least 680 hours in the base year and be available for work (and of course, separated from employment through no fault of their own). I have a hunch many Uber/Lyft drivers won't have worked enough hours to qualify (or were terminated for cause).”

Access to the new programs for drivers is expected to come online in July 2024.