By: Diane Ring
Today the 9th Circuit weighed in on the validity of a Seattle ordinance that requires businesses contracting with taxi-drivers, for-hire transportation companies, and “transportation network companies” to bargain with drivers if a majority of drivers seek such representation. The legislation, which effectively enables Uber and Lyft drivers to unionize, drew objections from Uber, Lyft and the Chamber of Commerce— which sued the City of Seattle. In an August 2017 post, I reviewed the ruling of the U.S. District Court for the Western District of Washington, which concluded that the Seattle ordinance was an appropriate exercise of the city’s authority and did not violate the Sherman Act (because of state action immunity) and was not preempted by the National Labor Relations Act (NLRA). So what did the 9th Circuit say?
The 9th Circuit affirmed the District Court ruling in part, and reversed in part. Specifically, the Court of Appeals affirmed the District Court determination that the ordinance was not preempted by the NLRA. But the 9th Circuit rejected the District Court conclusion that the Seattle ordinance satisfied the requirement for state action immunity. Thus, the 9th Circuit remanded the federal antitrust claims to the District Court. What this means is that the status of the Seattle ordinance remains uncertain, as we now await the District Court’s return to the case. Importantly, the 9th Circuit’s grounds for reversal do not dictate a specific conclusion by the District Court. The 9th Circuit has simply forced the District Court to address the antitrust claims head on, rather than rely on state action immunity to conclude that the ordinance was exempt from preemption by the Sherman Act.
What does the Seattle case say more broadly about debates in the sharing economy over worker status as employee v. independent contractor, and correspondingly the benefits and burdens of workers’ across multiple tax and regulatory regimes? Recall that the Seattle legislation did not seek to classify workers (nor did the 9th Circuit or the District Court). Rather, the legislation was viewed by some as a mechanism by which a local government could bypass ongoing legal, policy, and contractual debates about the proper status of workers and simply grant certain benefits (here, de facto unionization) to workers. At the time, this legal move was hailed in some quarters as a role model of local problem solving. Relatedly, it was consistent with an incremental approach to reform that my co-author Shu-Yi Oei and I had advocated as a way to take the steam out of the bigger worker classification contest. But ongoing litigation over the Seattle ordinance demonstrates that even this kind of local self-help faces significant hurdles.
Ultimately, the City of Seattle may prevail — but if it does, it will have taken several years and multiple court decisions.
Perhaps the lesson here is that the battle over gig economy worker classification (driven by competing views among workers, platforms, policy makers and others) cannot be avoided by legislation that directly allocates benefits and burdens and bypasses fundamental classification questions. The existing classification battle will simply reconstitute itself as a challenge to the substantive benefits and burdens legislation, and the debate will carry on.
So for now, we can add the Seattle legislation to the long list of hot spots where the ultimate treatment of gig workers will be playing out. Stay tuned . . .