Uber Technologies Inc. was dealt a setback in Seattle, where the city council voted unanimously to give collective bargaining rights to drivers.
The new law allows workers who drive for ride-hailing services, such as those from Uber and Lyft Inc., to form unions and negotiate wages with the companies. While Seattle Mayor Ed Murray expressed concerns, council members supported the bill.
“It was a huge victory for drivers who took a lot of risks; many have been deactivated, lost their jobs,” said Dawn Gearhart, a representative of Seattle Teamsters Local 117, which is working to organize drivers as part of the App-Based Drivers Association. “Drivers have really worked hard to get to this point.”
While Seattle’s collective-bargaining law is the first of its kind, Uber and Lyft face lawsuits and regulatory battles in cities around the U.S. that threaten to change how it classifies and compensates drivers. The companies oppose claims that drivers are employees, rather than independent contractors who aren’t entitled to Social Security benefits, mileage reimbursements and other benefits.
Uber, which has been valued by investors at $62.5 billion, has raised more than $10 billion to spread its ride-hailing business globally. A spokeswoman declined to comment on Monday’s vote in Seattle. Uber and Lyft have said drivers appreciate the flexibility to set their own hours and other perks that are unique to on-demand work.
“Lyft drivers are entirely in control of where or when they work, and this flexibility is exactly why the service is so popular with people looking to make extra income,” Sheila Bryson, a spokeswoman for Lyft, wrote in an e-mail. “Unfortunately, the ordinance passed today threatens the privacy of drivers, imposes substantial costs on passengers and the city, and conflicts with longstanding federal law.”
Uber’s employment practices have come under scrutiny recently, with drivers in California suing the company to be treated as employees rather than contractors. Last week, Uber asked its U.S. drivers to sign a reworded contract that restricts their right to sue.
Uber and Lyft make it easy to summon a car with the click of a button, but drivers can be booted permanently from the system almost as easily. “This bill was only introduced out of necessity after witnessing how little power drivers themselves had in working for a living wage,” Mike O’Brien, the Seattle councilman who proposed the collective-bargaining bill, said in a statement.
Under the new law, taxicab and for-hire car companies must bargain with a “driver representative” over the terms and conditions of work, if a sufficient number of drivers choose to be represented. In a letter to the council, Mayor Murray said putting the law into effect and defending it in court would be costly.
“I have been clear that I support the right of workers to organize to create a fair and just workplace,” Murray wrote. “But I remain concerned that this ordinance, to which amendments continue to appear today, includes several flaws.”
There is still a long road ahead in Seattle. More than half of active Uber or Lyft drivers in the city will need to vote to elect a representative. That process may not be resolved until at least the end of 2016, said Gearhart, the labor representative.