June 22, 2020

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Welcome to the ‘Hotel Seattle’

By
Vincent Vernuccio and Michel Saltsman
The Wall Street Journal

Seattle’s City Council prides itself on being an early adopter of new business mandates. Seattle was the first major U.S. city to adopt a $15 minimum wage and one of the first to require businesses to provide paid sick leave. The City Council achieved another first last week, when it unanimously enacted an ordinance requiring food-delivery app companies to provide gig workers “premium pay” for deliveries in the city, on top of their usual compensation, and prohibiting the companies from raising fees or leaving the city in response, even if the new rule causes them to lose money.

To understand how unprecedented this is, imagine if Seattle’s $15 minimum-wage law restricted restaurants from closing their doors or adjusting their prices in response, effectively forcing them to continue operating at a loss.

If that sounds illegal, it probably is. In a detailed memo sent in May to Mayor Durkan, the trade group TechNet described how the ordinance would violate the Takings Clause of the Fifth Amendment. By “forcing a business to continue unprofitable operations, the City would be extracting payments from an unwilling person and thus taking private property without any—let alone just—compensation.”

That isn’t the only problem. The ordinance may also thwart the will of Washington state voters, who in 2018 approved an initiative under which “a local governmental entity may not impose or collect any tax, fee, or other assessment on groceries.” Charges and exactions on the transportation of groceries were specifically precluded.

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