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Seattle Forced Union Dues Scheme Faces Legal Challenge

In 2015, the City of Seattle enacted a misguided ordinance that allows Uber and Lyft drivers, who operate as independent contractors, the privilege to collectively bargain. This March, the city selected the International Brotherhood of Teamsters Local 117 as ride-share drivers’ exclusive representative.

Two legal challenges have been levied against the first of its kind legislation that permits independent contractors to unionize. Today, the U.S. District Court for the Western District of Washington will hear arguments in the case filed by the U.S. Chamber of Commerce against the City of Seattle, in which the trade association is asking for a preliminary injunction to halt implementation of the ordinance.

The Chamber’s court filing cites several deficiencies with the legislation. Of note, the lawsuits argues that authorizing independent contractors to unionize runs afoul of antitrust laws as an illegal price-fixing scheme. As a Wall Street Journal editorial points out: “Under Supreme Court precedent, independent contractors can’t band together to set the prices or conditions of a service they provide.”

As noted, Uber and Lyft drivers work for themselves as independent contractors and not the ride-sharing companies. This raises the legal issue of whether permitting independent contractors to come together in order to set prices is illegal.

It also raises the issue of whether such a scheme interferes with national labor policy. Some legal experts contend that the National Labor Relations Act preempts such legislation because it prohibits independent contractors from unionizing. The preemption argument was brought forth in another lawsuit filed by National Right to Work Legal Defense Foundation on behalf of 11 ride-share drivers, which also asserts that forcing a union on drivers violates their First amendment rights.

On top of the legal concerns, the specifics of the ordinance are bad policy, which may cause ride share companies to exit the Seattle market, thus eliminating work opportunity for current drivers.

In December of 2016, the Competitive Enterprise Institute filed comments that highlight the troublesome aspects of the law and accompanying regulation.

First, the union election process denied a significant portion of ride-share drivers the right to vote on the union (ultimately the Teamsters in this case). The ordinance took away drivers’ right to vote on a union if they had not met the arbitrary requirement of having completed 52 rides in a three-month period during the preceding 12 months prior to implementation of the ordinance.

Such requirements deprive many part-time drivers and new drivers from voting. Despite losing voting eligibility, those drivers will still be forced to pay dues to the Teamsters and work under whatever contract the union negotiates. Workers should not be forced to accept an unwanted union and the payments that come along with it, especially one they had no say in electing.

Second, foisting collective bargaining and a union on ride-share drivers greatly diminishes drivers’ flexibility. A vast majority of drivers enjoy being their own boss. For example, an internal Uber survey found that 73 percent of Uber drivers said they prefer being their own boss rather than taking “a steady 9-to-5 job with some benefits and a set salary.”

Collective bargaining agreements, by nature, do not facilitate flexible work arrangements, because they are one-size-fits-all. As I noted in CEI’s comments:

Under the FAS [Seattle Department of Finance and Administrative Services] rules, areas subject to collective bargaining include minimum hours of work, scheduling, off-boarding, and wages. Imposing an EDR [exclusive driver representative] and collective bargaining agreement on drivers will limit the flexibility and independence of drivers, a primary reason why many individuals decide to drive for TNCs [Transportation Network Companies]. Moreover, many drivers use both the Uber and Lyft platforms. It is likely that there will be EDRs for each platform. That means drivers who choose to use both platforms likely will be forced to pay dues to two different unions, so drivers will probably choose one or the other platform to limit dues collection. The end result will be a de facto restriction on drivers’ ability to use both platforms to gain more business.

Third, and of urgent concern, the ordinance puts drivers’ private information at risk. Similar to the recently implemented National Labor Relations Board ambush election rule, the law compels Uber and Lyft to hand over drivers’ personal information—names, home and email addresses, and phone numbers—to any union representative who requests it while seeking to organize drivers. If the Western District Court fails to enjoin the ordinance, starting on April 3, Uber and Lyft will have to turn over drivers’ personal information over to the Teamsters.

As I also note in CEI’s comments:

Compelling TNCs to share drivers’ private information with a third party increases the risk of harassment, intimidation, and identity theft to drivers. The federal National Labor Relations Board (NLRB) recently issued final regulations with similar provisions that require employers to share workers’ private information with unions. In fact, an accompanying guidance memo from the NLRB’s General Counsel acknowledges that the rules could threaten worker’s privacy and that their information could be sold to telemarketers or given to political campaigns, and the lists used to “harass, coerce, or rob employees.” It should be up to ride-share drivers alone whether they wish to share their personal information.

With union membership having declined to the lowest point in United States history, unions have become creative in targeting unlikely candidates to force into paying dues. The scheme to organize ride-share drivers is similar to union efforts to represent home and child care providers, who frequently are taking care of family members. Neither group was clamoring for a union, but union-friendly elected officials passed suspect laws to ease organizing and forced union dues payments.