Labor leaders are calling it the “most aggressive regulatory move against Uber to date.”
Last week Seattle passed a law that gives Uber and Lyft drivers a legal right to create labor unions, a major regulatory measure that could entirely restructure the labor model of popular ride-hailing apps.
Click here to read more about the campaign for Seattle Uber drivers to unionize.
Ever more surprisingly, the measure was passed by Seattle’s City Council in a unanimous, 8-0 vote. It still needs to be signed into law by the city’s mayor (and the progressive Democrat has indicated that he will indeed support it), although it will almost certainly face an aggressive legal challenge from Uber and other companies that could tie it up in court for years.
The bill was brought forward by Councilmember Mike O’Brien, who has branded the recent ride-for-hire industry “a race to the bottom” for the American workforce. Just before the vote, council member Tom Rasmussen said the expected lawsuits were merely “the cost of seeking innovative policies.”
Like many other companies of their kind, Uber and Lyft classify their drivers as independent contractors, rather than traditional employees. The reason for this is manifold: under federal law, independent contractors are not given the right to organize together to bargain collectively over wages and working conditions the way other “employees” can. They also lack many of the traditional benefits that employees have, such as workers compensation coverage.
That’s the point at which Seattle’s city council decided to intervene. Under the bill just passed, “for-hire drivers” would be legally entitled to seek out representatives for the purpose of collective bargaining. If a majority of drivers at a given company designate a union as their representative, then by law Uber (or Lyft) will be required to bargain with that union within the city of Seattle.
Yet the for hire driving app is fighting the new measures aggressively, noting that it could set a precendent that empowers drivers across the U.S. Lawyers for Uber, for example, argue that the local Seattle law is pre-empted by the federal National Labor Relations Act, which already covers collective bargaining in most of the private sector. However, there is a distinct problem with this line of argumentation: the federal law specifically excludes independent contractors, and that’s the category the Seattle bill was designed to cover.
If the first tactic of using the labor law doesn’t work out, the industry may still have the option to fight the legislation using antitrust law. Under that scenario, Uber and company could argue that drivers banding together as independent contractors — and presumably raising the cost of their labor – qualifies as illegal price-fixing.
Seattle Mayor Ed Murray outlined his own concerns with the bill in a letter to councilmembers on Monday, saying that the legislation includes “several flaws.” Murray wrote that the local collective bargaining process needed to be clarified. He also said the cost of regulation would be “significant” and that the bill “fails to adequately examine” government expenses.
As independent contractors, Uber and Lyft drivers cover the cost of shuttling their passengers around. They provide their own cars, pay for their own gas and have to foot the bill for any repairs. Uber refers to its drivers as “partners,” and notes that they make their own schedules and only work when they want to.
It’s an arrangement that many retirees and other freelance drivers seem OK with. But plenty of drivers who try to make a full-time living out of it have their grievances. One of them, an outspoken Seattle driver named Takele Gobena, has publicly stumped for the Seattle ordinance. Gobena recently told The American Prospect that he regularly drives 55 hours or more a week for Uber and Lyft and still can’t support himself. Last week, Puget Sound Sage, a progressive advocacy group in Seattle, put out a report arguing that the Seattle law would lead to a more stable workforce in the ride-for-hire business.
An Uber spokeswoman said the majority of the company’s drivers have sources of income besides Uber.
“Uber is creating new opportunities for many people to earn a better living on their own time and their own terms,” she wrote. “Drivers say that with flexible and independent work with Uber, 50% of them drive fewer than 10 hours a week, 70% have full-time or part-time work outside of Uber and 65% choose to vary the hours they drive 25% week-to-week.”
Whether or not the Seattle legislation ultimately survives, it marks one of the most aggressive attempts by a government body to address Uber’s business model since the company first upended the traditional taxi industry. The law underscores much larger questions about the modern workforce — questions like who works for whom, and how independent are independent contractors.
Charlotte Garden, a professor at the Seattle University School of Law, noted that the Seattle legislation includes a couple of provisions that are far more worker-friendly than federal labor law. For one, the Seattle law allows workers to unionize if a majority of them submit representation cards to the company — a process known as “card check” — thereby bypassing a secret-ballot election. The Seattle law also allows drivers to sue in court if their collective bargaining rights are violated, a right not granted by federal law.
“I think one really great thing about the proposed Seattle ordinance is it takes away some of the incentive to misclassify drivers [as independent],” Garden said. “It seems like a sensible way to respond to [a] growing problem.”