Seattle law letting Uber, Lyft drivers unionize creates policy conundrums

An ordinance just passed by the Seattle city council now gives drivers of transportation network companies like Uber and Lyft the right to unionize. But the move is prompting questions about the potential costs of administering the new ruling, and about how the companies should be regulated nationwide.

Seattle became the first city in the country to give drivers for the companies the ability to organize and bargain collectively when it passed the new law last week, forcing city officials to take a much closer look at policies governing the companies.

Dawn Gearhart, a business representative with the Teamsters Local 117 union who coordinated with drivers to push for the legislation, told StateScoop that she heard from hundreds of drivers in the area about the need for an ordinance to help level the playing field.

“Drivers are at the mercy of what dispatch companies decide on a day-to-day basis, and we wanted to shift the balance of power to make it more balanced,” Gearhart said.

Both Uber and Lyft opposed the ordinance, claiming the right to unionize doesn’t match the needs of their many part-time drivers. An Uber spokesperson said in a statement that “Uber is creating new opportunities for many people to earn a better living on their own time and their own terms,” while a Lyft spokesperson didn’t respond to requests for comment.

Even with that opposition, the ordinance managed to unanimously pass the council, but Mayor Ed Murray refused to sign it. He noted in a statement that the city charter will allow it to become law without his signature, despite persisting concerns about the “relatively unknown costs of administering the collective bargaining process and the burden of significant rulemaking the council has placed on city staff.”

Specifically, in a letter to council members ahead of the vote, provided to StateScoop, Murray warned that the ordinance will put the burden of determining which drivers qualify for the ability to collectively bargain on city officials “without providing a mechanism to access previously unshared driver data.” He also raised concerned about the potential cost of legal challenges to the city’s new rule.

But Gearhart stressed that it would be a worthy effort for the city to try and clear those regulatory hurdles for the tremendous good unionization could do for drivers.

[Read more: Efforts to regulate companies like Uber, Lyft gain steam in Florida]

Once the city can sort out the collective bargaining process, Gearhart hopes to help the drivers organize to negotiate the addition of a post-ride tip option in Uber’s app. While some other apps do offer riders the option to tip their drivers, Gearhart notes that Uber has deactivated drivers in the past for soliciting tips.

“Drivers feel like if passengers could give a tip, drivers would … more likely to be better, safer drivers,” Gearhart said.

Gearhart also hopes to start the process of upping the rate the companies charge per mile — Uber’s rate has dropped to $1.35 per mile after starting at $2.50 when the company first started operating in the city.

“When people made the investment to become Uber drivers, they bought a car because they thought they were going to make a living wage,” Gearhart said. “They were at first, and we really think that these could still be good jobs.”

Yet Seth Harris, former Acting Secretary of Labor in the Obama administration and a distinguished scholar at Cornell University’s School of Industrial and Labor Relations, thinks the odds are slim that the drivers will get that far without facing legal action.

“I would be astonished if some huge law firm somewhere in California or Washington state isn’t already drafting the papers to file in court to block this ordinance,” Harris said. “So I don’t expect negotiations to begin anytime soon.”

Indeed, Murray’s letter to the council also warned of “significant costs associated with defending this bill in the courts” and Harris feels one of the companies could claim that the ordinance violates federal law by letting independent contractors organize. The Uber spokesperson declined to comment on the possibility of litigation.

But Gearhart argues that the law doesn’t change the drivers’ employee status at all, and points to cases in California and Washington where similarly independent workers were allowed to unionize. Harris agrees that it could survive a court challenge, but it will likely be a “close case,” and could “influence whether other jurisdictions are going to follow suit.”

“Some lawyers are about to make a large pile of money and we’re going to get a decision in an area where there’s not a lot of well-developed law,” Harris said.

Yet Harris feels that a flurry of legislation on the local and state levels is hardly the best way forward as officials wrestle with these questions.

“We really need Congress to act,” Harris said. “It may take events like the Seattle city council’s ordinance, decisions from courts and administrative tribunals…those things need to happen so that both sides realize they’re going to end up in a mess unless they strike some kind of large scale deal.”