To hear the U.S. Chamber of Commerce tell it, the very future of the “on-demand economy” is on trial this week in Seattle — and the group may have a point.
The Chamber is suing the city over an ordinance passed earlier this year that allows drivers for Uber and other ride-hailing services to join a union and press for better pay and conditions. The measure is believed to be the first of its kind in the country.
At a hearing in federal court on Tuesday, attorneys for the Chamber asked a judge to toss the ordinance on the grounds that it violated federal labor law, essentially arguing that it allowed independent contractors to form a cartel.
As the Chamber previously put it: “The Ordinance unlawfully authorizes for-hire drivers to engage in this per se illegal concerted action by forming a cartel … speaking as a single unit through an exclusive representative … and engaging in horizontal fixing of prices and contractual terms.”
It’s not difficult to see why Uber and Lyft, which fought hard against the ordinance when it was being debated and are members of the Chamber, would be concerned. Their business models are based on keeping labor costs low — without the burdens of meeting rules concerning minimum wage, healthcare coverage or mileage compensation that typically apply to employees. In turn, Uber and company say they offer drivers far more flexibility — in when and how much they work, for example — than employees get.
So it is that Uber has fought fiercely against lawsuits that sought employee classification, or least a greater measure of protection, for drivers. One of the biggest cases, involving drivers in California and Massachusetts, was settled recently with Uber promising up to a $100 million payout and offering certain concessions to drivers, but, crucially for the company, no finding that drivers could be considered employees.
The prospect of unionization has also loomed darkly for Uber. And it’s no wonder, given all the grief taxi driver unions in Europe have caused the company; they’ve led protests that have turned violent and pushed for the banning of ride-hailing companies.
In New York City, Uber agreed to meet with a driver association and to address certain claims through the group. But the association cannot negotiate issues of compensation. Similar groups have formed in other U.S. cities, and Uber and Lyft have shown themselves willing to open channels of communication with them.
Uber has long positioned itself at the forefront of the “sharing” economy, a new kind of company for the new global economy. But in taking a hard anti-union stance, it’s found common cause with arguably the most venerable lobbying group for corporations in United States.
One of the U.S. Chamber’s primary concerns is that if Seattle’s rule is allowed to stand, it could be replicated across the country: “But permitting literally thousands of separate and independent regulatory regimes would cripple the for-hire driver industry and, more broadly, the ‘on demand’ economy writ large.”
The judge in Seattle did not rule on the case at the hearing earlier this week.