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Uber, Lyft Drivers Could Form Unions Under New York Proposal

Dec. 2, 2019, 11:01 AM

New York lawmakers are planning to introduce a bill that would go beyond making Uber Technologies Inc. and Lyft Inc. drivers employees by also allowing them to unionize, a move that could clash with federal labor and antitrust laws.

“There’s no scenario I can imagine that’s not going to include collective bargaining,” said Sen. Diane Savino (D), adding that she and Assemblyman Marcos Crespo (D) plan to introduce the legislation after lawmakers return to Albany in January.

“New York is a solidly union town, and I am a solidly union senator,” Savino said, adding that legislation that doesn’t include collective bargaining is “an absolute nonstarter.”

Uber and Lyft already are fighting a multifront battle over their business models that treat drivers as independent contractors instead of employees. That includes class actions in at least three states alleging the companies have misclassified drivers, a $650 million New Jersey employment tax bill for Uber, and an ongoing lobbying war against a new California law designed to make it harder for companies to classify workers as contractors.

Workers tagged as independent contractors are treated as self-employed entrepreneurs who aren’t covered by minimum wage and overtime pay requirements and don’t get unemployment insurance and workers’ compensation benefits. And because collective bargaining among individual business owners is a form of illegal price fixing, organizing unions also is problematic under federal antitrust law.

Gig companies have posed new laws as threats to the flexible arrangements they offer workers, who largely have the ability to work when and where they want. Roughly 90% of Lyft drivers work less than 20 hours per week to supplement income from other jobs, according to the company.

“These are parents who have busy schedules, retirees, and students,” Lyft spokesman C.J. Macklin told Bloomberg Law. “Many turn to driving because traditional employment simply doesn’t fit their needs. That’s why we are advocating for solutions that expand the benefits and protections they already enjoy in New York, while still preserving the flexibility and upward earning potential they value so much.”

Lyft, Uber and other companies have floated some sort of sectorwide bargaining as part of a deal to avoid reclassifying drivers in California. But having union rights enshrined in state law would give drivers and other gig workers more leverage at the bargaining table. That’s why the move is likely to be challenged in court.

“There are a lot of companies that provide income for a lot of people where this would destroy their business model,” Frank Kerbein, the head of human resources policy for the Business Council of New York State, told Bloomberg Law. “Someone will take legal action to stop that.”

Kerbein nonetheless said he expects the measure would become law assuming it wins support from Gov. Andrew Cuomo (D), who hasn’t yet taken a position.

“I think the governor will look forward to getting a ‘best in the nation’ headline. I think it’s pretty clear that this is a priority for a lot of the people he aligns with.”

Beyond ‘Dependent Worker’

Savino and Crespo in June sponsored a bill (S.6538/A.8343) that would have created a new “dependent worker” classification and required the state labor department to study potentially giving those workers certain rights.

That bill died but Savino, who chairs the Senate’s Committee on Internet and Technology, and Crespo, who chairs the Assembly’s labor committee, said their new idea has momentum because of the passage of the California law, the New Jersey case and other recent events. It also is likely to get the blessing of some of the state’s top unions and other worker rights groups.

The new legislation could involve some version of the “ABC” test that states like California, New Jersey, and Massachusetts use to distinguish between contractors and employees. Those tests make it harder to classify workers as contractors than the standards used in other states and under federal law.

“We will probably move in a different direction from the dependent worker classification that we had drafted,” Crespo said. “We’re trying to see if there’s a way to come up with a more workable ABC model that would sort of meet our state standards and the fact that we do have, in labor law here, collective bargaining.”

The state Assembly labor committee is expected to host a public hearing Dec. 5 in Albany on proposed changes to the status of independent gig workers, Crespo said. There was a Senate hearing Oct. 16.

‘Work in Progress’

A federal judge in Washington state in 2017 struck down a Seattle ordinance that would have allowed Uber and Lyft drivers to organize despite their independent-contractor status. The U.S Court of Appeals for the Ninth Circuit last year affirmed that decision, finding that the local ordinance wasn’t exempted from federal antitrust law.

“The Ninth Circuit decision suggested that a collective bargaining law at the municipal level would run into problems, but it left open the possibility for doing it at the state level,” said Charlotte Garden, a professor at the Seattle University School of Law.

Worker advocates say a New York law, if crafted correctly, could qualify for a “state action” exemption to the antitrust restrictions. New York already has a state labor-relations law in place, they point out, and the government has a strong interest in regulating in this space.

“There are some legal exemption issues, but the framework exists,” said Bhairavi Desai, who runs the New York Taxi Workers Alliance. The alliance is part of a coalition of worker rights groups, including the National Employment Law Project and Service Employees International Union 32BJ, lobbying for legislation similar to the new California law.

Eye on Washington

The National Labor Relations Act largely preempts state and local governments from enacting their own labor-relations laws and the National Labor Relations Board, which enforces the law, hasn’t been shy about protecting its turf.

The agency sued Arizona in 2011 to block a state law it said would require workers to use secret ballot elections to recognize a union. The NLRB’s then-general counsel also sent letters to attorneys general in three other states where voters had endorsed similar measures.

“The board has taken up cases where states have encroached on the board’s authority,” said Glenn Spencer, a labor and employment policy lobbyist for the U.S. Chamber of Commerce. “I’m pretty certain that it would get challenged and that they would lose.”

The NLRB’s current general counsel said in a memo published earlier this year that Uber drivers aren’t covered by the federal labor law. Worker advocates in New York say that opens the door to extending union rights to gig workers under state law. But they also may run into a 1976 Supreme Court decision striking down a Wisconsin law protecting certain union pressure tactics, in which the justices said that Congress meant to leave some areas of labor relations unregulated.

“The memo does not mean the state would not be preempted,” an NLRB official told Bloomberg Law. The official, who said he was not authorized to comment publicly because the issue could come before the agency, cited the Supreme Court ruling in the Wisconsin case.

The board and its lawyers have been known to change their minds, especially after control shifts from one political party to another. If a new, Democrat-nominated general counsel were to later decide that gig workers are covered by the law, that would likely spark new preemption questions. The NLRB has gone back and forth during the Trump and Obama administrations over whether Uber drivers, Handy home cleaners, and other workers connected to customers through online platforms are covered by federal collective bargaining law.

All that leaves the question of whether drivers would unionize if given the chance.

Raymond Reyes, who has been driving in the Philadelphia area for Uber for five years, said he’s had some initial discussions with local unions about organizing drivers. “With a union, at least you can stop the downward spiral. The biggest things drivers need is due process when it comes to rider complaints and safety protections,” he said.

Still, he said, “A lot of people still want to be independent contractors.”

To contact the reporters on this story: Chris Opfer in New York at copfer@bloomberglaw.com; Keshia Clukey in Albany, N.Y. at kclukey@bloomberglaw.com

To contact the editors responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com