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Uber Driver Compromise in Washington Is Tougher Sell Elsewhere

Aug. 8, 2022, 9:30 AM

When rideshare drivers in Washington state struck a bargain this year with Uber Technologies Inc. and Lyft Inc., the industry said the deal would be a model for other states.

The drivers got a guaranteed set of benefits, including minimum pay per trip, paid sick leave, and workers’ compensation coverage, in negotiated legislation that Gov. Jay Inslee (D) signed into law in March. But the law also locked in the drivers’ status as independent contractors, denying them the full legal protections that come with employee classification, including federal protections for forming or joining a union.

In the wake of Washington’s compromise, other states aren’t rushing to strike similar deals. Many legislatures have wrapped up for the year, most recently in Massachusetts, stranding various Washington-style gig worker proposals without so much as a committee hearing.

The disagreements are substantial, even among driver groups. The biggest point of contention is whether drivers want employee status or prefer to remain independent contractors, as Uber and Lyft have classified them since first launching their businesses. Depending on whom you ask, bills that offer the right mix of workplace protections and collective bargaining rights might have broad enough support to pass in some states next year, including Connecticut.

“We kind of hit a brick wall last year at the end of session because there were so many competing interests. And sad to say, they’re still competing,” said New York state Sen. Diane Savino (D), who helped negotiate a proposal that stalled in 2021 and never officially resurfaced in the state’s 2022 session. That proposal would have established a sector council model of collective bargaining, with state officials enforcing whatever standards the industry and driver groups negotiated, while classifying the drivers as independent contractors.

Similar bills have been proposed in New Jersey, Pennsylvania, Vermont, and Wisconsin, often under the headline of creating portable benefit accounts for app-based drivers—meaning drivers who carry passengers as well as those who deliver restaurant meals for companies such as DoorDash Inc. and GrubHub Inc. A handful of red states, on the other hand, passed laws this year reinforcing app companies’ ability to classify drivers as independent, without extending benefits or legal protections.

The effort to adopt state legislative solutions is part of the larger tug-of-war over worker classification. It spans the spectrum from a local ordinance proposed in Chicago addressing driver safety and income, to a federal proposal brewing at the US Department of Labor that’s expected to make it harder for companies to treat workers as independent contractors. Litigation rages on, as well, as states such as California, Massachusetts, and New Jersey seek to enforce strict classification laws that state officials argue should require employee status for rideshare drivers.

Paul Morris/Bloomberg via Getty Images

Gig Industry’s Dual Track

The industry’s efforts at striking worker status compromises have followed a dual track in some states—urging state lawmakers to pass legislation, while also proposing ballot measures to put directly before voters as it did with California’s Prop 22. Voters passed that measure in 2020, after gig economy companies poured $200 million into campaigning for it.

Massachusetts Attorney General Maura Healey’s (D) pending lawsuit against Lyft and Uber helped motivate the rideshare industry’s efforts at passing a ballot measure there, similar to Prop 22. It would have guaranteed drivers benefits and legal protections while locking in their status as independent contractors. But the state’s highest court, in a June decision, blocked the measure from appearing on the ballot this November.

Similar legislation (H. 1234) failed to advance in the Massachusetts legislature, which adjourned for the year on July 31.

In Washington state, the compromise legislation enacted this year was aimed partly at preempting a ballot measure the industry was expected to launch. The deal had support from a local drivers guild and Democratic state lawmakers, but national leadership from the Teamsters and AFL-CIO criticized it and have opposed similar proposals in other states.

“Voters in a blue state like California generally respected the wishes of the drivers. Most of them wanted to remain independent contractors,” said Adam Kovacevich, founder and CEO of the Chamber of Progress, a tech industry policy group whose members include DoorDash, Grubhub, Lyft, and Uber.

“The Washington compromise acknowledges that reality,” he added. “When this is put to voters, that clearly is their preference as well.”

The preference among drivers isn’t clear cut, but whatever their employment status they need protections that none of the ballot measures or legislative proposals have offered, said Beth Griffith, executive director of the Boston Independent Drivers Guild. That includes the ability to set their own fares to control how much money they can make, as well as protections against violence and carjacking by requiring passengers to verify their identity like drivers do.

“They really want the companies like Uber and Lyft to follow the law,” said Griffith, who has worked as a rideshare driver. “Either make them true independent contractors where they can actually pick their rates and pass along higher operating costs to their clients” or make them employees.

It’s notable that the industry is fighting hardest for compromise legislation or ballot measures in places where officials and existing employment laws are pushing for companies to classify drivers as employees, said Jennifer Sherer, senior state policy coordinator for the Economic Policy Institute’s Worker Power Project. That list includes Massachusetts and California, which use the three-factor ABC test that tends to classify most workers as employees.

“We are seeing that battle play out on a state-by-state basis because we haven’t had a coherent approach to federal enforcement,” she said.

New Jersey also uses the ABC test, and the state’s labor commissioner has targeted Lyft and Uber with claims for past-due employment taxes due to their alleged misclassification of drivers. Compromise bills, which would set up worker benefits for drivers, haven’t shown signs of advancing through the legislature.

Connecticut Compromise?

The chances for a Connecticut legislative deal in 2023 look good, according to two advocates working with driver groups in the state—but they had different takes on the details of what’s likely to pass.

Sohail Rana, senior organizer for the multistate Independent Drivers Guild, said there’s agreement on a plan to keep drivers as independent contractors while guaranteeing them benefits and establishing a sector council model for collective bargaining.

“We have agreed upon in great depth the framework, but we ran out of time” in the 2022 session, said Rana, who also has worked as a driver. The IDG is affiliated with the Machinists Union, and launched in 2016 to represent Uber and Lyft drivers, with financing from the industry.

Dan Ocampo, a recent Yale Law graduate who has worked with the Connecticut Drivers United, said the proposal discussed with key state legislators would extend benefits but without settling the question of employee status for the drivers. He said the rideshare industry wasn’t involved in negotiations and hasn’t agreed to it.

“Whether or not Uber agrees is sort of ultimately immaterial to us and to most of the drivers,” he said, adding that the company has made clear they will oppose anything that hurts their business model. “It makes a real compromise solution sort of difficult to imagine.”

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editors responsible for this story: Genevieve Douglas at gdouglas@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com