Politicians, labor activists and business executives across the U.S. have their eyes on Seattle City Hall as a vote draws closer on what could become a legal breakthrough establishing collective-bargaining rights for contract employees.
Politicians, labor activists and business executives across the U.S. are watching Seattle as it wrestles over what role government should play in the country’s growing gig economy, which includes app-based ride-dispatch companies like Uber.
The first major city in the U.S. to set its minimum wage on a path to $15 an hour, Seattle may soon become the first to help Uber drivers unionize, as well.
Determined immigrant drivers, a hard-charging union and an ambitious City Council member have pushed the city close to enacting the groundbreaking legislation.
Councilmember Mike O’Brien’s ordinance would give drivers the ability to bargain collectively despite their status as independent contractors. It could pave the way for independent contractors in other sectors and cities to unionize, and it also could get the city sued.
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“We haven’t significantly changed our labor laws since 1947 and there’s no national consensus on how to change them, so workers and their advocates are turning to local governments to innovate,” said Wilma Liebman, a former chairwoman of the National Labor Relations Board (NLRB). “People are experimenting and Seattle is a leader.”
The proposal would require taxi companies, for-hire vehicle companies and app-based ride-dispatch companies, including Uber and Lyft, to negotiate agreements with drivers on issues such as payment and working conditions.
The approach would be novel because of the drivers’ employment status. The National Labor Relations Act gives employees, but not independent contractors, the right to bargain as a union.
O’Brien hopes the full council will vote on Dec. 14. Drivers are earning less money as more Uber and Lyft cars hit the road; some backing the bill have said that after expenses they now make only a few dollars an hour.
But city lawyers and bureaucrats are still vetting the ordinance. They’ve shared a number of questions and concerns about how it would work.
Under O’Brien’s plan, a nonprofit organization would need to show support from a majority of a company’s drivers to be designated by the city as their bargaining representative. The organization would use a list of drivers provided by the company.
“We’re trying to balance the playing field,” O’Brien said. “We have this multibillion-dollar company trying to monopolize the taxi industry around the world, and then we have drivers making less than minimum wage.”
Though the council’s finance committee approved the bill last month, Councilmembers Sally Bagshaw and Tom Rasmussen sent a letter to Federal Trade Commission officials Oct. 29 asking whether the ordinance might lead to antitrust violations.
Mayor Ed Murray hasn’t yet endorsed the plan. He has said he’s still reviewing it.
“I’m very optimistic this will pass,” O’Brien said. “We’re working closely with the mayor’s staff and he’s generally supportive. I just need him to not veto it.”
The backdrop for the Seattle legislation is a broader conversation about companies using apps to connect consumers more quickly and efficiently with goods and services.
Some of those companies have become very popular with both consumers and investors; 5-year-old Uber, for example, was valued in July at $51 billion. TaskRabbit is for odd jobs, GrubHub for food delivery and Airbnb for lodging. The companies can be attractive to workers because they offer more flexibility than a conventional job.
“The assumption that most work will be done by employees is getting questioned,” said John Boudreau, a University of Southern California business professor and co-author of a new book titled “Lead the Work: Navigating a World Beyond Employment.” “There are a lot of alternatives to actually hiring people.”
Labor activists, however, are anxious about apps making it easier for companies to avoid paying minimum wages, dealing with unions and providing benefits.
“Employers and employees used to be married to each other, and there was a sense of commitment and a joined destiny,” Steven Hill, a senior fellow with the New America Foundation, writes in “Raw Deal: How the Uber Economy and Runaway Capitalism Are Screwing American Workers.” “Now, employers just want a bunch of one-night stands.”
Nicole Grant, executive secretary of the Martin Luther King County Labor Council, said Seattle drivers “are saying workers should have dignity and power on the job regardless of where technology takes our economy.”
At a rally outside City Hall this month, Grant said the drivers are engaged in “the most important labor battle in America today, maybe in the world.”
The debate hit the country’s biggest stage in July, when Hillary Rodham Clinton made it part of the first major economic-policy speechin her 2016 presidential campaign.
“This on-demand or so-called gig economy is creating exciting economies and unleashing innovation,” Clinton said. “ But it is also raising hard questions about workplace protections and what a good job will look like in the future.”
O’Brien’s bill isn’t the only approach under discussion. Two prominent Seattleites, venture capitalist Nick Hanauer and SEIU 775 President David Rolf, are calling for a portable-benefits system to let independent contractors accrue overtime compensation, unemployment insurance, paid time off and retirement savings.
The idea is gaining traction in business and labor circles; Lyft’s co-founders recently joined Hanauer and Rolf in signing an open letter meant to build support for it.
In New York City, activists are pushing officials to protect independent contractors from wage theft, said Sara Horowitz, executive director of the Freelancers Union there. Horowitz recently compared notes with O’Brien, she said.
In Washington, D.C., Sen. Mark Warner, D-Va., has been talking about the potential need for a new worker classification between employee and independent contractor. And in San Francisco, Uber drivers are suing for employee status.
Their lead lawyer, Shannon Liss-Riordan, called O’Brien’s bill interesting. But with appeals, any lawsuit over the proposal might drag on for years.
Driver seeks help
Drivers in the taxi industry have for years been lobbying Seattle officials for changes. But the road to collective bargaining for Uber drivers began April 9, 2013.
That’s when Ethiopian immigrant Daniel Ajema, who started driving for Uber part-time while going to law school, mailed a letter to several local unions asking for help.
“Dear Sir or Madam,” it read. “We are a group of for-hire drivers, working for Uber. We are writing to request any assistance that you could extend to help us organize.”
Ajema, 34, wrote the letter out of frustration, he recalled.
“I liked the flexibility of driving for Uber. I liked the technology,” he said. “But I came across a number of issues. I heard other drivers complaining about the same things.”
Ajema connected with more drivers, mostly immigrants working on the apps full-time. Their grievances included Uber deactivating — essentially firing — drivers without hearing them out, rating them based on customer reviews and reducing per-mile payments out of the blue, he said.
“I ran into this older, Somali driver at a gas station,” Ajema said. “He told me he’d been deactivated because of low ratings. He’d spent $30,000 or more to buy a new car. He’d used his life savings.”
Ajema contacted Uber staffers in Seattle suggesting the company meet with a committee of drivers to review changes, he said. For months, the effort went nowhere.
“So I just Googled labor unions in Seattle,” Ajema said.
The only response came from Teamsters Local 117, which had already helped set up a trade association for taxi drivers.
“Nobody else wanted to do it,” said Dawn Gerheart, Local 117’s business representative.
Officials, meanwhile, were trying to decide how to regulate Uber and Lyft, which were adding drivers fast, disrupting Seattle’s taxi industry.
The council sought to appease taxi drivers by capping the number of Uber and Lyft vehicles on the road in March 2014, then lifted that restrictionthe following July.
Local 117 and drivers like Ajema kept pressing the council for action.
Spoiling a good thing?
Uber, Lyft and their allies are opposing O’Brien’s bill, arguing Seattle lacks legal authority to require bargaining and saying the ordinance would harm a thriving industry.
They may sue Seattle on those grounds if the council approves the plan. Earlier this year, city officials contracted with a private law firm for additional advice on the subject.
An Uber spokeswoman wouldn’t discuss the proposal on the record but said company Vice President David Plouffe, who managed President Obama’s 2008 campaign, will be in Seattle Dec. 4 to give a talk titled “Uber and the Future of Work.”
“Platforms like Uber are boosting the incomes of millions of American families. In Seattle alone there are over 5,000 people who use Uber to help pay the bills, earn extra spending money or transition between jobs,” spokeswoman Kate Downen said.
David Mack, Lyft’s public-affairs director, said the company agrees workers in the gig economy need help.
“Benefits should be following individuals regardless of where their income comes from,” he said. “Individuals shouldn’t be chasing benefits.”
But Lyft doesn’t support any change in employment status for drivers. Mack said 80 percent use the platform 15 hours or less per week.
Under a conventional employment model, drivers could lose the autonomy they currently enjoy, said Michael Beckerman, CEO of the Internet Association, a trade group. “Instead of having drivers decide what they do, you would have the Teamsters negotiating for them,” Beckerman said.
Not all drivers love the plan. Michael Stephens, 47, said he’s happy driving with Lyft about eight hours a week and doesn’t want a union bargaining on his behalf.
“If I become unhappy I can just do something else,” Stephens said. “I’m making good money in a short amount of time.”
Sukhchain Banwait, 61, a former taxi driver who now leases his cab while working for Uber himself, said the city should further regulate the industry rather than promote bargaining.
But Diawara Papa, 49, a fisherman in Alaska before he started driving for Uber and Lyft, said he wants to see O’Brien’s bill pass.
“Right now, we have no voice,” he said. “But this is a free country and if you fight for your voice, you might win.”