Whether a person is an employee of an app-based ridesharing company like Uber or Lyft under U.S. law has been a major hot button issue. Now, Congress may preempt the whole matter without debating it. A well-intentioned piece of public safety legislation only tangentially related to employment would settle the debate ieffectively turning Lyft, Uber and similar services into taxicab companies. Unions have pushed hard for a change like this, which would make it easier to organize ridesharing companies.
Being an alternative to traditional taxis, which are typically unionized, allowed ridesharing to take off in the first place. Forcing the services into that mode would also end ridesharing as a quick and easy way for workers to get additional money when they need it.
The legislation in question is called Sami’s Law. Its main provision is a requirement for app-based ridesharing companies to provide a digital means for customers to verify that a car is in fact the one they ordered. The law, authored by Rep. Chris Smith (R-N.J.), is named after Samantha “Sami” Josephson, a 21 year-old college student in Columbia, South Carolina, who on a late night in March 2019, tragically mistook a non-Uber car for the ride she had requested. Police found her murdered body the next day. Similar cases of criminal predators trolling popular nightlife areas around closing time and falsely presenting themselves as rideshare drivers have been reported.
Smith’s legislation is light on the specifics for how the digital verification requirement would work, mostly just saying the companies shall provide a method. That’s a little redundant given that most app-based services already tell the customer when the driver arrives and the vehicles typically carry signs or stickers identifying them as working with the service. But mandating digital verification as an additional safety measure isn’t necessarily a bad idea, or even controversial. So, Sami’s Law is the kind of thing that could pass Congress quickly with minimal debate.
Congress should give it serious debate, however. The legislation would define rideshare businesses as “transportation network companies” (TNCs) that provide a platform to “connect passengers to TNC drivers in exchange for compensation or payment of a fee in order for the TNC driver to transport passenger using a TNC vehicle to a point chosen by the passenger.” A passenger is defined as “an individual who is matched with a TNC driver by submitting to a transportation network company a trip request using a TNC platform.” In both cases, the company is defined as the entity doing the connection between the driver and the passenger.
The language subtly defines the rideshare company as the transportation provider. The companies have always contended that they function more like eBay: They provide a platform but the transportation provider is the driver, just as eBay is not the seller of the goods on its site. The companies define the drivers as contractors that use its app, not employees.
Smith’s legislation would also create a council to oversee the law’s implementation. The council would include representatives from federal agencies like the Department of Transportation and outside groups, like a victim’s rights nonprofit. The board would include a space for an organization “comprised of and established for the benefit of TNC drivers.” In other words, a union.
Whether the drivers are truly contractors for the rideshare companies has been a matter of intense debate. The companies contend this is key to their business model, since contracting allows for maximum flexibility for things like scheduling. Few drivers work 40 hours in week and many only work a few hours a week, even though they work more. Critics, led by unions, contend that calling drivers contractors is a dodge to avoid complying with state and federal workplace regulations like overtime and health insurance coverage. Contractors are also much harder for unions to organize since the labor laws were written with employees in mind. Uber and Lyft are nonunion.
California enacted its AB5 law in early 2020, strictly limiting when businesses can label workers as contractors. Uber and Lyft challenged the law and warned they would have to cease operation in the Golden State if it wasn’t repealed. AB5 faced a backlash after it disrupted the livelihoods of numerous traditional freelancers like musicians and writers as well as people who did random “gig economy” work for extra money. Late last year, California voters approved Proposition 22, which exempted rideshare companies from AB5.
Unions continue to push for limiting contract work and they have an ally in the Biden administration and Congressional Democrats, who are backing the Protecting the Right to Organize (PRO) Act. The PRO Act would, among other things, enact a nationwide version of California’s AB5.
However, the PRO Act is high profile and controversial. It could run aground in the Senate given the Democrats’ narrow majorities. Sami’s Law would give unions a back-up chance to win on one of their key issues.
There is a legitimate debate to be had over whether rideshare drivers are contractors or employees under U.S. law. Different laws use different definitions of employment. Congress should have that debate rather than pass mostly unrelated legislation that resolves the issue in favor of unions.