Hailed As Rideshare Driver Victory, New Law Lets Uber and Lyft Limit Labor Rights

by Tushar Khurana

On March 4, a labor law concerning rideshare drivers successfully passed through the Washington State Legislature and made its way to the governor's desk. The Drivers Union, a ride-hailing drivers association affiliated with the Teamsters Local 117 labor union that lobbied heavily for the bill, called it an unprecedented victory that "secures the highest labor standards for Lyft and Uber drivers … including a statewide minimum wage for drivers, paid sick leave, workers' compensation benefits, and protection against unfair termination."

After it was signed into law on March 31, Peter Kuel, president of the Drivers Union, says his phone was ringing incessantly. "The calls I'm getting from drivers are amazing," he said. "Most drivers are asking when this law goes into effect. They want it to go into effect tomorrow, not next year, because they are so happy about it."

But for many labor leaders and drivers organizations across the country, including the Teamsters' own regional and national leadership who lobbied against the bill, HB 2076 was cause for alarm. While it does offer material benefits to Washington State's 30,000 Uber and Lyft drivers, it also formally legislates that app-based ride-hail drivers are not employees in Washington State, making it the latest salvo in the gig companies' sophisticated and well-funded campaign to deny their drivers basic employment protections by rewriting laws at the local, state, and national level.

As Rebecca Dixon, executive director of the National Employment Law Project (NELP), wrote in a letter to the Senate, the bill "enshrine[s] a second class employment status for Washington's Transportation Network Company drivers" and denies them "access to the foundational protections that workers and unions have fought to win and expand over decades."

HB 2076 specifically creates a statewide Driver Resource Center to resolve account deactivations (which will likely be run by the Drivers Union members themselves); establishes a per-mile and per-minute pay rate that in many jurisdictions amounts to substantial increases for drivers; provides State-run sick pay and workers' compensation benefits during "passenger platform time" (i.e., when a passenger is in the driver's vehicle, only a fraction of the time drivers are actually working); and sets up a task force to make recommendations on unemployment and paid family leave.

In exchange for these benefits, it legislates that ride-hail drivers for Uber and Lyft are contract workers, and also preempts cities from enacting their own legislation to protect drivers.

The deal comes after years of negotiation between Uber, Lyft, and Teamsters Local 117, and as Kuel himself stated, is "a huge compromise."

Uber and Lyft's Thinly Veiled Threat

Uber and Lyft have long argued that their drivers are independent contractors, an arrangement that allows them to pay piece rates that can amount to less than minimum wage, skirt labor regulations, and deactivate a driver's account — in other words, terminate employment — at any point in time. They are perhaps the most iconic companies that make up the so-called gig economy, and have ushered in a smorgasbord of Silicon Valley startups peddling human labor via app. (Think DoorDash and Instacart for deliveries, Rover for dog walking, TaskRabbit for home repairs.)

Uber estimated that in 2019, 1 million people in the U.S. alone drove for the platform. Because Uber classifies them as contract workers, none of those drivers was guaranteed a minimum wage, sick pay, unemployment insurance, workers' compensation, or the right to collectively bargain with their employer. Calling the drivers independent contractors also opens them up to more precise forms of exploitation. Nicole Moore, president of the California-based organization Rideshare Drivers United, described how, as Uber approached its initial public offering, "the company literally used us as their bank account, squeezing drivers [by temporarily reducing rates] to look better to their investors."

Incorrectly classifying employees as contractors is lucrative and hardly new. Uber and Lyft have simply made the practice a business model, and are thus busily attempting to cement their drivers' independent contractor status in local, state, and national laws. HB 2076 in Washington comes on the heels of efforts in California and Massachusetts, which have set the tone for this campaign.

In 2018, California's Supreme Court created a three-part "ABC Test" to determine whether workers were employers or contractors, and a year later, the test was passed into law. According to the test, a true independent contractor must have control over their work and how it is done, must perform work outside the core business of the company hiring them, and must generally provide a similar service to other employers. Think photographers hired to take wedding photos, or an artist paid to paint a mural on the exterior of a local retail business.

These kinds of workers have control over their rates and the substance of their work. Rideshare drivers fail to meet any of these criteria — making them employees. Yet, as Moore described, "when AB-5 passed, that codified into law that we were indeed employees, the companies didn't all of a sudden change their model and start paying up. Lyft and Uber are not your teddy bear tech friends who are basically liberal, these are people who have refused to follow laws over and over and over again."

Instead of complying, Uber and Lyft threatened to leave California altogether (echoing a similar threat made by Jeff Bezos in Seattle in 2018), and ultimately set out to write their own law. They spent $224 million to pass the most expensive ballot measure in U.S. history, Proposition 22, which created an alternative employment test designed to accommodate the gig companies' current business model, decisively classifying Uber and Lyft drivers as independent contractors. Armed with this success, the companies have proceeded to show further displays of corporate power in states across the country. This year, the Massachusetts Coalition for Independent Work, which is funded by Uber, Lyft, Instacart, DoorDash, and Postmates, is expected to spend around $100 million on a Prop 22-style ballot initiative in Massachusetts, and similar organizations have popped up across the country.

So when prior to this year's legislative session the Washington Coalition for Independent Work received $2 million from Lyft and began hiring lobbyists and consultants, it was a thinly veiled threat for policymakers in the state ahead of the legislative session that they were ready to do a repeat act and force a California-style ballot measure in Washington if suitable legislation was not passed. The final version of HB 2076 includes a nearly identical alternative employment test to California's Prop 22, legislating that drivers are not employees.

"Uber and Lyft did not enter into negotiations for this deal because they didn't think there was some benefit for the company," explained Michael Gonzales, representative for the Teamsters Joint Council 28, a regional body of Teamsters Locals in Washington, Alaska, and Idaho. "In my experience, national and multinational corporations don't do anything just for the benefit of their employees."

Preempting Future Organizing, or Promoting It?

HB 2076's second trade-off — preempting local jurisdictions from passing new regulations and taxes for ride-hailing companies — is clearly a nod to Seattle's best-in-the-nation pay standards for drivers. That the Drivers Union agreed to these terms poses a curious contradiction, because Seattle's regulations are the result of the Drivers Union's own advocacy.

From its origins in 2014 as the App-Based Drivers Association (ABDA), the Teamsters Local 117-affiliated Drivers Union has been working with ride-hailing drivers for years. Despite its name, it is not technically a recognized union. Nevertheless, its first concerted action took the issue of employment classification head on. Since at the federal level the National Labor Relations Act only allows employees, not contract workers, to form a legally protected union, in 2015, the Drivers Union worked with the Seattle City Council to create a City-regulated collective bargaining process for drivers.

It was a novel idea, and the U.S. Chamber of Commerce quickly sued the City on behalf of Uber and Lyft, kicking off a four-year legal quagmire that eventually watered down the ordinance. So in 2019, Seattle introduced the Fare Share legislation package, which regulated the companies directly by creating a minimum pay rate for drivers intended to match Seattle's minimum wage and established a dispute resolution center and arbitration process to challenge driver account deactivations. In 2020, the Drivers Union also pushed the City Council to establish gig worker paid sick leave requirements for the duration of the pandemic.

These ordinances served as a model for drivers organizations throughout the country. As Nicole Moore, president of the California-based organization Rideshare Drivers United, described, "For a while, New York City and Seattle were the only two places with good regulation and no trade-off, no reduction of drivers' rights."

One might think a bill preempting the type of local regulations around which it has built its base of members and supporters thus far would be a non-starter for the Drivers Union. However, Kerry Harwin, communications director for the Drivers Union, suggested that HB 2076 might serve as a potential catalyst for more organizing across the state. After all, organizing workers who have no defined workplace and no reason to meet one another is not easy.

"It's not like a traditional workplace where everybody comes to the same office every day," explained Harwin. "There is a reality that it's a different kind of environment that makes for a different kind of organizing." In particular, the Drivers Union hopes to use the newly established Driver Resolution Center as a means to connect with more drivers.

"What we're really focusing on now," Harwin continued, "is making sure that drivers do receive the rights in the bill, are aware of the rights they do have, and that we're building out our statewide presence and representing them in deactivation disputes, so that when it is time to come back to the table, we have a robust team and have built solidarity between TNC drivers across the state."

But Were Drivers Truly Involved in the Deal?

On an overcast Friday afternoon in late April, the Emerald visited a nondescript parking lot that Uber and Lyft drivers use in between rides, located just south of the Tukwila International Boulevard light rail station on Pacific Highway. Drivers wait at this lot to pick up customers from the airport, one of the more lucrative routes in the Seattle region. About a hundred drivers were waiting for rides — chatting in groups, talking on the phone, or smoking cigarettes. They were generally appreciative of the Drivers Union. Rageh Adams, a driver, spoke to the organization's success with dispute resolution. "Before the union, if a customer complained about you, you'd be done. The company wouldn't even ask you about it, they would send you a message that a customer complained, and that would be it."

Drivers were generally aware of HB 2076 — many of them mentioned receiving regular updates through an email Listserv from the Drivers Union — and say they supported the pay raises and the benefits it provided. Yet when asked about the bill's trade-offs, none of the drivers were aware of the sections on employment classification or local preemption.

This lack of education might speak to the manner in which drivers were engaged in the legislative process. Drivers received email updates about the bill, and the Drivers Union mentioned conducting a formalized survey in the run-up to the legislative session. Over 750 drivers across the state signed a petition demanding that the Senate vote on the bill. "There has been driver involvement for a long time," explained Harwin. However, he admitted, "We're saying to drivers, what do you want and we'll push that forward. We're asking what they want from the companies, not necessarily having an in-depth legislative discussion. We could be having a conversation driving towards what we're pushing for in the bill, but maybe the people we're talking to aren't aware of the exact legislative process going on."

As longtime labor organizer Jane McAlevey suggests in her book No Shortcuts, unions are effective when they engage a majority of workers in collective struggle. When unions substitute true worker participation for shallow mobilizing, they fail to build real agency, dignity, or power and their wins are correspondingly shallow. This model, in which the workers' role is severely diminished and they function as symbolic actors rather than central participants, often leads to closed-door deals between bosses and union staff and is hardly new to Washington State.

Unions have historically also cut highly controversial deals with Uber and Lyft, arguably benefiting their revenue streams much more than the workers. In New York City, the Machinists Union (IAMAW District 15) set the most notorious example of this in 2016, when it partnered with employers and received an undisclosed sum of money to form the Independent Drivers Guild (IDG). Earlier this year, United Food and Commercial Workers announced a deal with Uber to represent 100,000 of its Canadian workers, though it is unclear how many of the workers were even aware of this development. While HB 2076 did not involve any such official partnership between union and employer, Labor Notes reported on documents from 2018 suggesting that Teamsters officials had discussed setting up an IDG-style arrangement in San Francisco and Seattle with Uber and Lyft.

A document from 2019 suggested that "[Teamsters] 117 [is] heavily involved … in substantial negotiations this coming week with both companies." When asked about this, John Scearcy, secretary-treasurer of Local 117, denied any such involvement, responding, "Teamsters 117 never engaged in discussions with Uber and Lyft about an IDG-style initiative in Washington State."

A Debate Within the Labor Movement

Teamsters Local 117 and the Drivers Union's official stances on the bill might also explain the drivers' lack of awareness about the trade-off behind HB 2076. In an email statement, Scearcy said, "The new state law does not change the employment classification of Uber and Lyft drivers." Kerry Harwin concurs. "It is true that drivers will continue to be contractors, but Uber drivers and taxi drivers before them have been contractors for as long as they've been around, so this legislation does nothing to change the status that is already in place and in no way prevents the people of Washington or their elected leaders from classifying drivers as employees."

However, Section 1 of HB 2076 clearly includes a four-part test to determine whether drivers are employees, and this wording is nearly identical to Article 2 of California's Prop 22, the California ballot measure created by Uber and Lyft to ensure independent contractor status to their drivers in the state.

When asked about this, Harwin responded, "To focus on structural similarities without an appreciation of the impact [HB 2076] has on drivers — best in the nation pay, public benefits, and just cause protections — seems to miss the part that matters most, driver welfare."

This latter argument points to an ongoing debate within the labor and gig worker organizing community. As Michael Gonzales phrased it, "Some voices [in the labor movement] believe if that's the best deal you can get you should go out and get it, because it's better than what these workers would get if Uber or Lyft spend a ton of money like they did in California." But, he added, "Teamsters Joint Council 28 and the International Brotherhood of Teamsters fundamentally don't believe that through state action we should be creating a third tier of employees under the law. What we should be doing is fighting to make sure that people are not misclassified. And that is not easy and it sometimes takes a long time, but that is why the labor movement has been around over a hundred years."

"We're deploying work differently, but that doesn't make our work piecework," Nicole Moore emphasized. "The fact that the companies are saying we don't pay you for wait time is a violation of labor rights, and that is what they want. They want it so that Walmart cashiers are only paid for the seconds that they are scanning items, not for the time they are waiting for customers in line."

The False Promise of Flexibility

Driver flexibility and the ability to set their own schedule is probably the issue most often brought up in the debate around employment classification. Francis Gemfi, another driver, explained why flexibility drew many drivers to the work initially. "There are some people who come in the morning, shut down, and then resume in the evening. … People can visit their country for a few months and come back home and the job is still there."

"People need flexibility in their lives," said Laura Padin, director of work structures at the National Employment Law Project, "and the gig companies have really effectively set up this false narrative that there needs to be this trade-off between scheduling flexibility and employee rights and protections. They say you can't have control over your schedule and be an employee. This is just a lie. Many employees have control over their schedule. It just so happens that underpaid workers in labor-intensive industries often do not have flexibility."

"Many of the rights that you get as an employee," Padin added, "are things like social safety nets. … If you lose your job, you should be able to get unemployment insurance. If you get sick on the job, you should be able to have some basic income. People shouldn't have to give them up to get other things. And companies should be paying into those state funds to strengthen them."

Nicole Moore offered another angle to this discussion. "We share the desire with the majority of drivers that being independent and having a flexible schedule is a priority for us. However, given how the companies have run the business, there really isn't flexibility. … And as they continue to lower fares for us, we have less and less flexibility. If you don't drive at high surge times and you don't drive more than 40 hours a week, you don't have enough to pay rent."

Back at the lot, Rageh Adams agreed. "Of course there are busy times and slow times. If you say you're going to work during slow times, you will make nothing. It would be a waste of gas and time."

Race — The Gig Companies' Key Public Relations Strategy

The law that legally protects workers rights to organize and collectively bargain in a union, the National Labor Relations Act of 1935, specified that it "shall not include any individual employed as an agricultural laborer, or in the domestic service of any family or person at his home." These two primary categories of workers accounted for about half the U.S. workforce at the time, with a majority being Black, immigrant, or both. The Social Security Act, also passed in 1935, contained a similar carve-out.

This legacy of racial exclusion defines the independent contractor category today. As Laura Padin observed, "We often see that contracted, gigged out jobs are much more likely to be held by People of Color than direct-hire permanent jobs."

The gig companies cynically lean into this legacy as a justification for their business model. In an email to the Emerald, a Lyft spokesperson pointed out that the independent contractor model should not be changed because "71% of Washington drivers who use the Lyft app also come from communities of color that have been disproportionately impacted by the pandemic."

Gig companies have a history of tactically weaponizing race in their campaigns. Former Bernie Sanders press secretary Symone Sanders and the Rev. Al Sharpton went on the air at Uber's behest during a campaign to increase the number of rideshare drivers in New York, calling it a racial issue since Uber drivers are more likely to give rides to Black people. When Prop 22 was placed on the ballot, gig companies paid California NAACP President Alice Huffman $95,000 to advocate for independent contractor status, saying that rideshare companies provide jobs to People of Color.

As documented by The Markup, Uber and Lyft are also known to spend large amounts of money placing op-eds and articles in local news outlets in an attempt to shape public opinion and draw support for their lobbying campaigns. They target outlets that serve Communities of Color, and often donate to the organizations of the authors writing the op-eds.

Here in the South End, it is perhaps no coincidence, then, that earlier this month, as the Seattle City Council advanced the PayUp legislation package establishing minimum pay rates for app-based delivery workers, an Uber public affairs representative asked this writer to report on how Uber Eats allegedly provides greater food access to low-income people in food deserts, offering quotes from a local Black pastor.

But, as Nicole Moore reminds us, racial justice and workers rights are often the same thing and need not contradict each other.

"The people in this country are demanding a lot of things. We see Starbucks and Amazon workers [who are also largely racialized] organizing around the country and winning.The other huge demand is for racial equity and the whole movement that has developed around Black Lives. While there is such a huge demand for labor rights and equity across racial lines, creating a second class of labor that can be racially exploited would be going in the opposite way that people are demanding we go."

Editors' Note: This article has been updated to correct a reference to the Seattle Metropolitan Chamber of Commerce; the correct organization is the U.S. Chamber of Commerce. We regret the error.

Featured Image: Local rideshare drivers represented by the Drivers Union stand together at a nondescript parking lot located just south of the Tukwila International Boulevard light rail station on Pacific Highway. (Photo: Ronnie Estoque)