Council considers revising ordinance allowing Uber/Lyft drivers to unionize

On Tuesday, the Council’s Governance, Equity and Technology Committee will take up an ordinance making a big change to its 2015 ordinance granting Uber and Lyft drivers the right to unionize — and in the process cutting the heart out of the ordinance.

The proposed revisions would specifically prohibit the collective bargaining process between drivers and TNCs (i.e. Uber and Lyft) from dealing with pay issues. The allowed collective bargaining topics would still include vehicle equipment standards, safe driving practices, criminal background checks, minimum hours of work, conditions of work, and applicable rules.

Last May, the Ninth Circuit Court of Appeals issued a split decision on the legal challenge to the ordinance by the U.S. Chamber of Commerce. It ruled that the city cannot invoke the “state-action immunity” doctrine to skirt around the Sherman Antitrust Act, which disallows price-fixing among competitors; however, the appeals court didn’t rule on whether the ordinance does, in fact, violate the Sherman Act, and remanded the case back to the district court for a trial on that issue. But it also ruled that the National Labor Relations Act does not prohibit independent contractors from collective bargaining. Subsequently, the City of Seattle lost its bid to have the full Ninth Circuit hear its appeal, so the May ruling stands.

The change to the ordinance that the Council will contemplate this week appears intended to thread this needle. The city has obviously concluded that it can’t escape the Sherman Act with regard to the provisions of the ordinance relating to pay, since those will be interpreted as price-fixing among drivers competing for the same fares. So it is not only striking that part of the ordinance but also affirmatively prohibiting pay issues from the collective bargaining process altogether. But armed with an appeals court opinion that says the National Labor Relations Act doesn’t prohibit collective bargaining on other topics, it is leaving the rest of the ordinance intact.

Arguably the wage issues are the most important element of collective bargaining rights for the drivers, and they received top billing in the Council’s press release when it passed the bill in 2015. Excluding them cuts the heart out of the collective bargaining process; while the other topics are important, they aren’t as important as pay issues. And without pay in the mix, the drivers have one less bargaining chip to use as leverage in negotiations.

It may be that the city is hoping that the state will use its “state-action immunity” to allow the City of Seattle to bypass the Sherman Act at a future point in time and reinstate pay issues as a topic for collective bargaining. The Ninth Circuit’s ruling emphasized that while the “state-action immunity” doctrine is generally frowned upon, it is still valid where the state clearly articulates a policy to displace competition in a particular market, and the state takes an active role in supervising the anticompetitive intervention in that market. The state legislature nearly passed a law earlier this year that would regulate Uber and Lyft statewide, and it is widely expected to take it up again in January. That law would not have granted collective-bargaining rights to drivers, nor would it have met the Ninth Circuit’s criteria for granting state-action immunity to the City of Seattle, but it’s possible that the legislature may try to shoe-horn that into the next version of the bill.

Assuming the Council passes the ordinance in the coming weeks, expect the City Attorney’s Office to move for dismissal of the Chamber of Commerce’s lawsuit as moot based on the Ninth Circuit’s ruling and the fact that the ordinance no longer addresses pay issues.

The new ordinance is co-sponsored by Council member Mike O’Brien and Council President Bruce Harrell. O’Brien co-sponsored the original ordinance along with then-Council member Nick Licata.

UPDATE 12/6/18:  The city and the chamber of Commerce jointly filed a motion to push out the briefing schedule for the case. The motion says notes that the Council is contemplating removing the provisions related to collective bargaining of pay-related issues. The Chamber believes that this doesn’t resolve all the issues in their lawsuit, but is willing to wait to see what the Council does first.