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Friday, July 28, 2017

Can independent contractors form unions to collectively bargain as a group? A federal court in Seattle says no. The matter reached court after drivers for Uber and Lyft, classified as independent workers, filed to form a union to collectively bargain for rights and a contract between Uber and Lyft, and its drivers.

While this case is specific to drivers, many people are watching, including in the Jewish community where it has become much more common in recent years for Jewish providers not to hire full-time employees but rather put up specific tasks to contract and per-diem workers. While this saves agencies on salary and benefits upfront, if these workers are deemed to have the same rights of employees, in the end it may make independent contracting work more expensive.

In this case, the city of Seattle passed an ordinance permitting independent contractors to unionize and collectively bargain. The drivers argue that under today’s “sharing economy,” the right to bargain is simply a recognition of the reality of how relationships between employers and workers exist today.

But Uber and Lyft filed for an injunction. The essence of their argument is that the very definition of “independent contractor,” where workers can set their own schedule, and decide if and when they want to work, completely contradicts the basis of collective bargaining agreements, which set rules and responsibilities to which all employers and workers must adhere.

Uber and Lyft say that statutes granting collective bargaining rights to workers, like the one passed in Seattle, is an illegal alteration of the understanding created when a company agrees to employ an independent contractor.

US District Court Robert Lasnik agreed. He ruled that Seattle’s ordinance “would likely disrupt businesses which are built upon its relationship with independent contractors in fundamental and irreparable ways.”

Lyft and Uber drivers maintain that for the purposes of collective bargaining they are actually more like employees than traditional independent contractors. Part of the argument is based upon the fact that the companies have fundamental rules, obligations, pricing structures and wage scales that are treated on a take-it-or-leave-it basis. But Lyft and Uber say drivers are free to drive when they want or not without risk of termination.

The Seattle ordinance is not dead and the car service drivers will be permitted to make their argument that they should be entitled to unionize, notwithstanding the traditional reading of labor law that unions are available for the protection of employees of a company, and not outside workers. But drivers for Uber and Lyft say the fundamentals are the same. In essence, you have strong management imposing their will on a source of cheap labor upon which they are capitalizing and taking advantage of their comparative lack of leverage. The drivers say labor law needs to come into the 21st century, and part of doing so is to recognize the traditional labor-employee relationship is dead. The new company employee is the independent contractor and until independent contractors are given all rights and remedies available to traditional employees under labor law, it will effectively turn back time to before unions were ever created.

Management will feast on their position of strength, leaving independent contractors weak and unprotected. Whatever the outcome, it is a hearing and conversation that needs to take place as the workplace has changed. What is the role of independent contractors as workers? How much will can companies impose on their independent contractors? Does the lack of a formal relationship matter when the company benefits from the worker’s labor? These are the questions that will be essential to America’s workforce over the next decade as the world evolves into the sharing economy.

By Stephen Loeb

 Stephen Loeb is a practicing attorney in New Jersey and New York.