Seattle is a city that likes to be friendly to its workers. It was one of the first to implement the $15 minimum wage law, a paid leave law, and even enacted an ordinance protecting hotel workers.

But it was still surprising when the City chose to jump feet first into the wettest, hottest mess in employment law when it enacted an ordinance entitled the Ordinance Relating to Taxicab, Transportation Network Company, and For-Hire Vehicle Drivers. The law, a first nationwide, allows drivers for ride-hailing companies, such as Uber and Lyft, to unionize. And recently, a Washington court rejected Uber's challenge to the Ordinance, finding its enactment was constitutional.

By way of background, the enactment of the Ordinance was anything but smooth. After the City Council drafted it, the Mayor refused to sign it. He complained the Ordinance was "flawed" because it did not address a number of key issues including, most notably, identifying the drivers who could vote on unionization. The City Council enacted it without his signature. It then kicked the figurative can to a city agency, the City of Seattle Financial and Administrative Services Department, to resolve these issues through the rule-making process. Following a highly contentious and publicized comment period that involved Uber, Lyft, a union, and drivers, on December 29, 2016, the Financial and Administrative Services Department enacted some, but not all, of the necessary regulations.

The unionization process cobbled together by the City Council and Financial and Administrative Services Department is quite complicated and goes something like this:

  1. If a union is interested in representing drivers working for a particular ride-hailing company, that union must request that the Director of the Financial and Administrative Services designate the union as a "qualified driver representative."
  2. If the Director designates the union as a qualified driver representative, the union can then inform any ride-hailing company with more than 50 drivers that it wishes to become the "exclusive driver representative" for the drivers. The ride-hailing company, called the "driver coordinator" in the Ordinance, must then provide the union with the names, contact information, and license plate numbers of every driver "qualified" to vote on unionization.
  3. A driver is "qualified" to vote on unionization only if the following criteria are met:

a. the driver contracted with the driver coordinator within the nine months preceding what is known as the "commencement date," which is now January 17, 2017;

b. the driver has driven at least 52 trips during any three-month period in the 12 months preceding the commencement date; and

c. the driver is not an employee of the driver coordinator. Independent contractors are the only drivers eligible to join the union.

  1. The union then must report the results of the vote of qualified drivers to the Director. If a majority of the "qualified drivers" for the driver coordinator vote in favor of the union, the Director designates the union the "exclusive driver representative." The union then represents all drivers for the driver coordinator, regardless of whether they were "qualified" to vote for or against the union.
  2. The exclusive driver representative and the driver coordinator negotiate a collective bargaining agreement. Any agreement must first be approved by the Director to be binding.
  3. If an agreement cannot be reached, they must submit it to arbitration. The arbitrator submits his or her proposed agreement to the Director who, again, decides whether the agreement effectuates the policies of the Ordinance.

The Ordinance is enforced by the Director, who can impose fines of up to $10,000 per day for non-compliance. A driver can also file suit in state court and obtain an injunction, damages, and legal fees for retaliation.

To pay for all this, the City has imposed a four cent tax on each ride.

Uber challenged the Ordinance in state court, seeking a writ barring enforcement because the rule-making process followed by the Department of Financial and Administrative Services was arbitrary and capricious, violating the Constitution due to a lack of notice and flawed rule-making. The Washington judge denied the writ. It is unclear whether Uber will appeal.

The U.S. Chamber of Commerce previously challenged the law in federal court, arguing that it violated federal antitrust and labor law. The federal judge dismissed the case, however, holding the claims were not yet ripe since no unions had been formed, leaving the door open to future challenges.

Meanwhile, the process is proceeding. On March 3, 2017, the Director designated Local 117 of the International Brotherhood of Teamsters as a qualified driver representative. Local 117 then informed Uber and Lyft that it seeks to become an exclusive driver representative for all drivers who contract with these companies. Uber and Lyft have until April 3, 2017, to provide the names and contact information of the qualified drivers, and the union reports back to the Director on the results of the vote at the end of July. By the end of August, the Director will announce whether there is a union for the drivers.

Uber has threatened to leave Seattle if it is forced to work with unions. If that occurs, Lyft and other transportation companies may conclude that unionization is not so bad after all.

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