The Seattle City Council recently passed a first-in-nation local ordinance that seeks to allow ridesharing and taxi drivers to unionize and collectively bargain. The city is trying to solve a problem created under federal law that doesn’t permit companies to provide benefits and protections to independent contractor workers like private for-hire drivers.
While this is certainly an understandable goal, the city’s ordinance misses the mark in a number of ways. For those looking to Seattle as a model for independent-contractor organizing, it is important to understand what the measure does and doesn’t do and why, in many contexts, it is bad public policy.
While changes in employment law are certainly needed (see the white paper Modernizing Employment Policies to Unleash the New Economy to understand why), here are the top seven reasons Seattle’s approach is not the way to go.
Shaky legal grounds
Federal law (the National Labor Relations Act) allows only employees to unionize and collectively bargain. Independent contractors generally do not have this right. Federal law, therefore, prohibits Seattle from going around this restriction in its effort to grant organizing rights to independent contractors.
Also, independent contractors who collectively bargain on compensation or other working conditions may run afoul of federal antitrust laws. It seems likely the ordinance will be legally challenged for these (and other) reasons. The result will no doubt influence whether, and in which ways, other states and localities pursue similar measures.
Seattle’s stated public policy goal makes no sense
In an effort to stay within the bounds of state limitations on what the city can and can’t regulate, Seattle’s ordinance says that driver unionization is needed to ensure the “safety, reliability, cost-effectiveness, and the economic viability and stability” of ridesharing and taxi services. Viewed in context, this stated public policy goal makes no sense.
No other city has pursued a private for-hire driver unionization policy. And no city has experienced public safety or economic viability problems because of non-unionized independent-contractor drivers (nothing in the record identifies any specific examples in Seattle). Interestingly, nearly 90 percent of U.S. taxi drivers are independent contractors.
Seattle’s approach is unworkable on many fronts and wrong for the city, drivers and riders.
Yet policymakers have not previously sought to allow taxi drivers to unionize in order to protect the public safety, or for any other reason. This is true of the Seattle City Council, which has regulated taxi services for decades. If public safety and economic harm are risks of non-unionized ridesharing and taxi drivers, then the same is also true for Seattle delivery, courier, truck and other independent-contractor drivers that the ordinance ignores.
The ordinance unwisely assigns public safety responsibilities to the union and drivers
The ordinance says that ridesharing and taxi companies must negotiate with the drivers’ union on a variety of subjects, including vehicle equipment standards, safe driving practices, criminal background checks and work hours. These subjects all relate to public safety which, from a public policy perspective, is the City Council’s sole responsibility to protect. Any effort to assign these decisions to a collective bargaining unit can create public safety risks.
For example, drivers may want the right to drive older or less safe cars (to reduce the costs of vehicle operations), work longer hours (to make more money) or utilize less comprehensive background checks (to allow more drivers to participate). It is unwise and risky for the city to delegate these types of decisions to anyone else.
The ordinance requires drivers to give up information privacy protections
The ordinance requires ridesharing and taxi companies to provide the union with the names, addresses, email addresses and phone numbers of all independent-contractor drivers. This is true even if drivers don’t want to be part of the collective bargaining process. For drivers, this requirement raises serious information privacy and choice concerns.
Drivers appear forced to participate in the union
The ordinance is less than clear about whether individual drivers can choose whether collective bargaining is right for them. There is certainly no express opt-out provision. Assuming the ordinance stands, drivers should have the express right to decide whether or not to be part of the union and pay union dues. If drivers see value in relation to cost and other factors, they will join. If not, the city should ensure they have the right to forgo participation.
The ordinance exposes the catch-22 of federal employment policy
Federal laws, along with thousands of agency determinations and court cases, govern the relationship between employers, traditional employees and independent contractors. Seattle’s ordinance essentially requires that ridesharing and taxi companies treat workers in ways that would likely convert otherwise independent contractors into traditional employees.
Put differently, federal policy does not allow these companies to provide the benefits and protections the city is requiring.
The ordinance will cost the city and riders lots of money
Seattle estimates the unionization process will cost the city $2.2 million in 2016, and more than $750,000 in each of the years 2017 and 2018. These costs will be passed on to riders in the form of higher fees. Estimates do not appear to include the full costs of multi-year litigation and a highly contentious and burdensome agency rulemaking process, both of which are likely. Bottom line, Seattle taxpayers will probably need to subsidize the city’s unionization effort in amounts that are not yet known or budgeted.
Federal policies currently prohibit employment innovation. Ridesharing, taxi and other companies utilizing independent-contractor workforces are not allowed to offer selected benefits and protections to workers even if they want to. Only Congress can modernize employment policies in ways that allow greater employer/independent contractor flexibility and solve the problem Seattle’s ordinance exposes. Until that happens, Seattle’s approach is unworkable on many fronts and wrong for the city, drivers and riders.