Uber, Lyft and other ride sharing services have become synonymous with single handedly turning the world of taxis up, over and squarely down on their faces. These services have given the customer the power to hail a ride with ease from their phone, and at rates the taxi companies haven’t yet found a way to compete with. However, that disruption comes with a price. Since 2012 Uber has racked up an impressive 173 lawsuits from various cities and companies from around the world. It looks like Seattle could be number 174.
Among the many reasons that Uber has been sued, the most high profile case stems from a lawsuit in San Francisco seeking to classify Uber drivers as employees. This is in direct contrast with Uber’s business model, which classifies their driver’s as independent contractors who are merely using Uber’s services to connect with their customers. In other words, Uber is the middleman, and the drivers are self-employed entrepreneurs. It’s through this legal grey area that Uber has been able to thrive. By classifying driver’s as 1099 contractors, Uber and Lyft don’t have to pay payroll taxes, nor do they have to worry about minimum wage or overtime for the drivers. This same classification means that Uber and Lyft aren’t responsible for maintenance, health insurance or other benefits for their drivers.
Enter Seattle. The same kinds of problems that exist for drivers in San Francisco and other major cities are present here as well. But city councilman Mike O’Brien is choosing to enter the fray from another angle. I sat down with O’Brien last week to get his take on these ride sharing businesses and what he hopes to do about the problems he sees. On September 8th, O’Brien introduced his bill “Giving Drivers A Voice.” His initiative essentially gives the drivers of Uber, Lyft and other for-hire services the ability to unionize for collective bargaining purposes.
Unlike San Francisco, O’Brien doesn’t seek to classify Uber drivers as employees in this new era of independent contractors; he merely wants to give them a voice at the table. Under current law within the National Labor Relations Board, independent contractors are unable to organize and collectively bargain. The Giving Drivers A Voice initiative would change that in Seattle.
When asked about his rationale for organizing and unionizing over employment classification like San Francisco, O’Brien said this, “The idea is we all need to be trying different things. …We’re going to be trying these ideas on all fronts and see where the courts end up and what policies make sense.”
O’Brien was right to mention the courts because as in California, if the initiative passes, a lawsuit from Uber is likely to follow. Uber did not immediately respond to questions at the time of this article’s publication, but allowing contract labor to organize is unprecedented in the U.S., and Seattle seems to be the first city to take this issue on. Thanks to Seattle’s specific state authority to regulate the taxi industry, this kind of proposal is allowed to move forward under city law.
In an area of employment and transportation with so much grey area, O’Brien actually expects the city to get sued if his proposal passes through the full council. I asked the councilman what he would say to taxpayers who would likely end up paying for this potential lawsuit. “We set policy in a number of ways. Sometimes we set policies where there’s not clarity and we have disagreement,” O’Brien said. “And so we’ll spend money on a lawsuit if that’s what it takes, my preference would be not to, but if we feel that’s the appropriate policy, it’s one of the ways we advance our policies.”
O’Brien also cites the need for these kind of policies so that workers in Seattle can make a living wage in the city as it rapidly grows. “When people in our community are making [less than minimum wage,] they clearly can’t support their families and the result is that we have to sign up thousands more for our utility discount program. We all pay for that,” O’Brien said. “We’re funding millions of dollars of affordable housing and that money doesn’t come out of nowhere.”
In response to criticisms that drivers would be forced into a union, O’Brien emphasized that the decision to unionize is in the hands of the drivers themselves. With that said, if the majority of drivers do want to unionize, those in the minority wouldn’t be able to opt out, and would automatically be included in the bargaining process.
“We’re not going to say the drivers have to organize. We’re just saying if the drivers want to organize, [ride-sharing companies] have to honor that,” he said. O’Brien feels that by allowing driver’s to come together for bargaining purposes, they may be able to negotiate things like minimum fares and establish some formal process for deactivation, which is currently done through email with little to no explanation.
Giving Drivers A Voice passed through the Finance and Culture Committee with a resounding 7-0 vote on October 6. There is no date set for a full council vote, but O’Brien is hopeful that the support that carried his proposal through committee will be present when it goes up for a final vote, “Assuming this goes forward, we want [driver’s and businesses] to negotiate together the terms of your labor and the city is just going to make sure the public is protected,” he said.