Seattle city council adopts ordinance allowing for-hire drivers to unionize; changing the rules on the gig economy

In our foundation report, we noted the proliferation of local labor laws, including minimum wage and paid sick leave. They can be problematic.

In addition to the absolute costs of these measures, and the challenge they create in competing with other employers not subject to the same mandates, local governments’ wage and benefit regulations create compliance problems for employers operating in multiple jurisdictions. They also create difficulties as employers look to align their human resource policies among cities with different mandates.

This week, Seattle added a new layer of labor policy regulation, becoming the first city in the nation to pass an ordinance allowing for-hire drivers to unionize. The Washington Research Council has a good roundup of news stories and analysis. 

Ian Adams at Real Clear Policy notes the significance of the measure.

The ability to bargain collectively is more typically associated with a traditional employer-employee relationship, and it is a poor fit for companies like Uber and Lyft. If Seattle’s bill finds traction elsewhere, the specter of widespread collective bargaining almost certainly will put a damper on TNCs’ [Transportation-network companies] massive valuations.

On the other hand, he writes,

Alternatively, Seattle’s measure could prove more symbolic than substantive. In the short term, there will be at least a year before any collectively bargained terms could come into effect. Further, it is a virtual certainty that Uber and Lyft — and perhaps even some taxi firms — will challenge the ordinance in court.

Seattle Mayor Ed Murray will allow the measure to take effect without his signature.

Meanwhile, Mayor Ed Murray told the council in a letter Monday that he supports the right of workers to unionize but has concerns about the bill. Murray worried about the unknown costs of administering the measure, the burden of rulemaking on city staff and the potential costs of defending it court.

Legitimate concerns, certainly. As the gig economy continues to grow and disrupt traditional enterprises, we can expect to see more regulatory and legislative attempts to redefine the rules.