Seattle, Washington is the next major city to expand employee protections to workers of the gig economy.

Starting July 1, 2020 new minimum wage requirements for gig economy workers such as Uber and Lyft drivers will go into effect. A new tax of 51 cents per ride will be added for every ride a driver completes and will contribute towards paying the driver’s $16 an hour minimum wage, in addition to workplace protections, affordable housing programs and other civic initiatives. The tax is estimated to generate $133 million in new revenue by 2025, according to a post by GeekWire.

The move to implement a minimum wage for gig-economy workers comes as part of the Fair Share program, driven by Seattle Mayor Jenny Durkanan and was approved by the City Council. The plan will also introduce a Driver Resolution Center, which will act as an arbitrator “between ride-hailing companies and drivers who have been deactivated from the apps,” according to GeekWire.

The move to extend protections to the gig workers is changing the way employers must operate. Seattle is not the first to expand protections to workers not technically classified as employees. California for instance has passed AB 5 which is poised to require reclassification of independent contractors as employees for many gig economy employers. New York City has amended its Human Rights Law to extend employee anti-discrimination protections to independent contractors and freelancers.

As states and cities continue to move towards a more equal and fair work environment for all individuals in the workplace, employers should ensure that they are properly classifying workers. Employment classification, exemption status, and wage determination legislation are becoming more stringent. Failing to comply with the FLSA, the Equal Pay Act (EPA) and other employee protection laws could be costly for organizations.

HR managers should be prepared to prove that they are classifying their employees correctly. Often times, the data that stores this information is messy and disorganized. HR managers should consider looking for third-party expertise in data consolidation and validation to ensure their data is organized and accurate.

In order to avoid instances of misclassifications or pay inequalities, best practices suggest undergoing a proactive pay equity audit.

A pay equity audit can identify pay differences between employees that cannot be explained due to job-related factors. This type of audit not only identifies problems, but also provides actionable solutions. It gives employers an opportunity to ensure fairness in pay and prevent employee issues. It allows the employer to minimize risk by identifying and remediating deficiencies, providing the employer with greater standing to defend against and win claims of discrimination.

Overall, a comprehensive proactive pay equity audit is the best place to start to understand what your company is doing right, and where it can improve, before regulatory investigations and employee lawsuits require you to act.

Conducting a pay equity audit is a key component to ensuring equitable compensation within your organization. Just as important as the analysis is how you communicate findings and progress with various stakeholders. Download The Pay Equity Communications Planner to learn best practices for discussing compensation, both internally and externally.