Gig Drivers Unionize Without Employee Status Under State Plans

Lawmakers in California and Illinois are proposing to let ride-hail drivers unionize and bargain for better wages and benefits, without changing their status as independent contractors.

Both state legislatures are considering plans to establish a unionizing process, mirroring the model being implemented in Massachusetts after voters approved Ballot Question 3 in November.

Giving drivers a way to negotiate workplace standards statewide without formal employee status is the newest in a string of policymaking experiments aimed at that segment of the gig economy. Its outcomes remain to be seen, but business groups worry that recognition of driver organizing could encourage sectoral bargaining in other industries.

Because Uber Technologies Inc. and Lyft Inc. classify their drivers as independent contractors instead of employees, the drivers are normally excluded from many workplace benefits and legal protections such as health insurance, overtime pay, and the federally protected right to unionize.

Drivers have won pay floors and benefit mandates through legislation in Minnesota and Washington and legal settlements in Massachusetts and New York. But some labor advocates and worker-side employment lawyers see collective bargaining rights as drivers’ logical end goal.

The California legislation (AB 1340) “would create a system for sectoral bargaining, which for this industry would be a good system, because companies wouldn’t face pressure to undercut each other on labor costs in a race to the bottom,” said Scott A. Kronland, an attorney with Altshuler Berzon LLP. He represented drivers suing to challenge Prop 22, the industry-backed 2020 ballot measure that locked in their status as independent contractors.

The California bill is advancing through the state Senate after passing the Assembly, but faces opposition from Lyft, Uber, and business groups including the California Chamber of Commerce.

They argue it would contradict the will of voters who passed Prop 22. A state appeals court in 2023 struck down a portion of Prop 22 that required a seven-eighths vote of the legislature to establish collective bargaining for drivers.

Unlike in California, Lyft and Uber remained publicly neutral on the Massachusetts ballot measure and Uber recently vowed to do the same in Illinois. For the companies, the bargaining schemes have the benefit of keeping drivers classified as independent contractors.

“As we’ve said for years, we’re willing to work with state legislators on benefit and protection legislation that prioritizes preserving drivers’ independence and flexibility,” said Uber spokesperson Josh Gold.

Deescalating Classification Fight

Policy efforts to improve driver pay, benefits, and working conditions have recently evolved away from fighting for employee status.

Washington state lawmakers brokered a compromise in 2022 between drivers and the industry, enacting the first statewide law mandating minimum pay and benefits for drivers while affirming independent contractor classification. Iterations of the concept have begun to spread, though they face lingering reluctance from labor leaders to forfeit the employee status fight.

But unions are increasingly advancing strategies to improve driver jobs regardless of classification. The Service Employees International Union and the International Association of Machinists sponsored the Massachusetts ballot measure, and they’re leading similar early-stage efforts in the Illinois legislature.

“Workers want to be able to negotiate on their behalf, to sit across from the companies. They know better than anyone how this industry works,” said Genie Kastrup, president of SEIU Local 1 in Chicago.

Efforts in Massachusetts to win state recognition of a driver union are already underway, as the Department of Labor Relations advances proposed regulations to govern the process.

Union organizers in Massachusetts estimate they’ve collected signatures from more than the 5% of most-active drivers needed to trigger the next step, requiring Lyft and Uber to turn over driver contact information, said Mike Vartabedian, a Machinists District 15 representative and board member for the state’s nascent App Drivers Union. They’re waiting to submit signatures once the state agency says its data security system is ready, likely this month, he said.

“Massachusetts really did something historic last November with the passage of Question 3,” he said. “This model is starting to spread across the country.”

Legal challenges to driver bargaining can’t be ruled out, as Seattle faced when it attempted a similar local driver bargaining model. But models with state supervision such as the California, Massachusetts, and presumably Illinois systems shouldn’t encounter the same federal antitrust concerns as Seattle did, Kronland said.

Pay, Benefits Bills

While the driver union model is gaining traction, states continue exploring other options. In line with Minnesota and Washington, Oregon lawmakers considered a proposal (SB 1166) this year to mandate minimum pay rates, certain benefits, and guardrails on driver deactivations.

“Our brothers to north in Washington fought for almost a decade to get a statewide bill passed,” said Joe Jackson, a ride-hail driver and an organizer with Drivers Union Oregon. “The next time we come back with a bill like this, we will pass it.”

States also are showing increasing interest in portable benefits, a gig-economy alternative to traditional employer-sponsored health care and retirement benefits. Members of Congress recently re-introduced federal legislation.

The portable benefit concept has had most of its success in Republican-majority legislatures, with laws enacted in Utah in 2023, then this year in Alabama, and Tennessee. A Wisconsin bill awaits Gov. Tony Evers’ (D) signature.

There are signs of bipartisan interest, as Maryland’s and Pennsylvania’s Democratic governors signed onto portable benefits pilot programs with DoorDash Inc. alongside Georgia’s Republican Gov. Brian Kemp.

But any widespread, bipartisan adoption will require worker advocates to once again set aside the employee classification fight, said Ruth Whittaker, director of civic innovation policy at tech industry group Chamber of Progress, of which Lyft and Uber are members. Unions opposed the Wisconsin bill this year, because it makes clear drivers aren’t employees under state law, she said.

“Legislators, particularly in the states, have accepted the classification isn’t going to change,” she said. “So how can we work with that to expand benefits and increase protections?”