With campaigns ongoing across the country aimed at raising the minimum wage at a state and local level, one might wonder, why not apply the same pressure on local governments to create their own labor laws? The battle between Uber and the City of Seattle demonstrates the complexities surrounding any attempt to regulate labor relations on a local level.
In 2014, the Seattle City Council passed an Ordinance allowing for ride-sharing drivers, who are classified as independent contractors, to form unions and bargain with Uber and other ride-sharing companies. This arrangement is unique because the National Labor Relations Act, which governs the formation of unions for most employees in the private sector, only covers “employees” and explicitly excludes independent contractors. Thus, the Ordinance is premised on the reasoning that, if the NLRA does not cover these workers, then it should be permissible for local government to step in and provide its own collective bargaining regime. Similar reasoning provides lawful justification for minimum wage laws, and many other local employment laws, for states and municipalities all over the country. So, what is the problem?
The issue is that the NLRA “preempts” other laws that purport to regulate labor relations for private sector workers. Essentially, it is the only law that governs this field and no other legal structure can interfere with it in any manner, with certain exceptions not relevant here. Even though the NLRA excludes independent contractors, the argument for preemption is that the NLRA must be read as prohibiting collective bargaining with these individuals. In other words, the NLRA commands that only employees can engage in collective bargaining.
Since the passage of the Ordinance in 2014, the court battle has been ongoing between the lawyers for Uber and the City of Seattle. In August 2017, a U.S. District Court Judge allowed the law to go into effect, but, on September 8, 2017, a federal Appeals Court enjoined the law pending an appeal. We will need to wait and see whether the courts will allow states and municipalities to enact local labor law covering independent contractors. If the law becomes effective, we can expect a rash of similar laws in the labor-friendly parts of this country. Stay tuned.
Andrew MacDonald is an associate in the firm’s Labor and Employment Department, resident in its Philadelphia office.