Ride-share websites like Uber and Lyft have been magnets for legal and ethical business questions since their origin. The latest legal question the industry will face: Should their drivers be allowed to unionize?
Seattle City Council member Mike O’Brien has proposed a bill to help Uber and Lyft drivers to unionize in Seattle. The proposed bill would provide a route to collective bargaining and could have dramatic impact on the ride-share service and taxi industries. If passed, Seattle would be the first city in the nation to legally mandate the right to unionize for drivers using ride-share Web applications.
"This is an opportunity for Seattle to once again play a leading national role in promoting workers' rights," it said, in a reference to the northwest US city's progressive history.
"All workers deserve the basic rights to organize and to bargain collectively," the Martin Luther King Jr. County Labor Council said in a letter posted on the city council's website.
The Seattle City Council will vote on the legislation after hearing testimonies from drivers and other parties. The current legal battle is one of many Uber is facing.
Uber operates in 300 cities across the world and has raised $7.4 billion from investors, who have praised the company’s flexibility and ability to expand rapidly. Uber’s business model is built on the concept of independent contractors. The Uber smartphone app simply connects riders and drivers, who are not Uber employees, the company argues.
The potential Seattle legislation brings the issue of independent contractors, who they are, and what benefits they have, back into focus.
The US Labor Department attempted to clarify the definition of independent contractor in July after concerns the classification was being used too liberally as companies restructure and downsize.
When classified as an independent contractor “employees may not receive important workplace protections such as the minimum wage, overtime compensation, unemployment insurance, and workers’ compensation,” a memo from the US Labor Department states.
Last week, a US judge ruled that Uber drivers in California can enter an existing class action lawsuit against Uber over their employment status, even if their contracts have an arbitration clause.
The Seattle legislation could offer ride-service drivers more rights that could eventually begin to chip away at the company's profit margins.
“Uber, lauded by investors for its nimble, low-cost business model and quick growth potential, officially employs just under 1,000 full-time workers at its San Francisco headquarters,” The Christian Science Monitor’s Schuyler Velasco wrote in a piece about independent contractors. “But those selling points will be in serious jeopardy if it is required to consider its 167,000 drivers employees as well.”
This report includes material from Reuters.