Can Independent Contractors Form Unions? Seattle Wants to Allow It.

space-needle-independent contrcator drivers seattle uber lyft seattle law ordinanceA legal battle in Seattle (“The Battle of Seattle!”) may soon determine whether independent contractor drivers can form unions. In 2015, the city passed a law allowing Uber and Lyft drivers to organize. The mayor allowed the law to go into effect but didn’t sign it because he was concerned it would spawn expensive litigation. He was right.

This month, a federal judge handed the City a victory, dismissing a lawsuit by the U.S. Chamber of Commerce which had argued that the ordinance was illegal. The decision is certainly not the last word on the subject, since the Chamber will appeal and there is a companion lawsuit still pending anyway.

The issues go beyond the basic question of whether independent contractors can form unions.

Generally, they cannot. Independent contractors are separate businesses. Antitrust law generally forbids businesses from banding together and collectively fixing prices and other conditions. You know the drill: Collusion bad, free market good.

The judge ruled that the circumstances here, however, are different than usual. First, it’s worth noting that the “unions” aren’t really unions (despite being overseen by the Teamsters), since unions are for employees and these are representation associations. That seems like word play to me, but everyone’s being careful not to call these things “unions.”

Second, the situation here is not merely that independent contractors are banding together to fix prices. Rather, a local law has established a procedure for ride hailing drivers to collectively share information in a particular format and setting, then negotiate collectively in a government-approved manner. The law enables the activity, not the drivers.

Ok, but what about the National Labor Relations Act (NLRA)? Only employees can unionize, right? Well, sort of. The NLRA definitely does not apply to independent contractors.  But, then again, the NLRA definitely does not apply to independent contractors.

So what does that mean? Does the NLRA preempt laws that would allow non-employees to unionize (as the U.S. Chamber of Commerce argued)? Or does the NLRA’s inapplicability to contractors mean that Congress was indifferent (and silent) as to whether independent contractors could organize? The judge went with Door #2, deciding that the NLRA did not pre-empt the City of Seattle from enacting this ordinance.

The judge dismissed the lawsuit, finding that the Seattle ordinance did not violate any federal or state laws.

This is a case to watch. If Seattle ultimately succeeds in setting up a way for independent contractors to band together and collectively bargain, the gig economy could be changed fundamentally. Other cities would be sure to follow suit and pass similar laws.

A lot still needs to be sorted out, and this is a case that could eventually be heard by the U.S. Supreme Court. An ordinance like this poses a challenge to the scope of federal authority over labor law and antitrust law, both of which are areas where a uniform national policy has generally been considered important to maintain.

Keep an eye on this one. We’ll see if Seattle can hold onto the ball this time, or if the city again throws an errant pass to a wide-eyed Malcolm Butler hiding in the end zone. [Seahawks fans are advised not to click on this link.]

///Update 9/11/17: In early September, the Ninth Circuit Court of Appeals placed this ordinance on hold, while the case is on appeal. That means the ordinance is not currently in effect, and  independent drivers cannot currently organize under this law. A final decision is expected sometime in 2018.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Enter your email address to follow this blog and receive notifications of new posts by email.