Despite Donald Trump’s unprecedented war on unions, there remain ways, as I noted yesterday, that blue states—states with Democratic trifecta governments—can fight back on workers’ behalf. Last week, California did just that, as the Democratic-dominated state government helped craft a deal that would permit Uber and Lyft drivers to form unions and bargain collectively with those companies. As had not been the case before, Uber and Lyft signed on to the deal.
This was the second such effort on the part of the state’s government. In 2019, the legislature passed and Gov. Gavin Newsom signed Assembly Bill 5, which declared Uber and Lyft drivers to be what they’d always appeared to be: employees of those companies, not independent contractors, and therefore covered by statutes like the state’s minimum-wage law and eligible to unionize if they so desired.
But shortly after Newsom signed the bill, Uber and Lyft poured millions of dollars into a ballot measure exempting them from the new law and permitting them to keep treating their drivers as independent contractors. Claiming that their ballot measure, Proposition 22 on the November 2020 ballot, would actually increase drivers’ incomes, and throwing more than $100 million behind that spurious claim, the companies prevailed, as the measure won the support of 59 percent of an understandably confused electorate.
California courts upheld most of Proposition 22’s restrictions but left intact just enough workers’ rights so that there remained, at least in theory, a way that drivers might still be legally able to go union. It required threading a needle in which they remained independent contractors, thereby limiting what their union could do. Even so, there was no reason why Uber and Lyft would agree to that.
Last week, however, talks between the companies, the state’s largest union (SEIU), and members of the legislature and the governor’s office produced a deal. Both the companies and the union agreed to the terms of a bill that would keep the drivers classified as independent contractors (and therefore not under the jurisdiction of the soon-to-be Trumpified and hence anti-union National Labor Relations Board) but would recognize their right to bargain collectively with those two companies. At a time when Trump’s unilateral abrogation of contracts with federal workers has already reduced the number of union members in the United States by roughly half a million, this bill could potentially bolster union ranks by a similar number.
There were two reasons for Uber and Lyft’s about-face. The first was a pledge from Newsom and legislative leaders to enact a separate bill being pushed by the two companies alongside the one granting drivers collective-bargaining rights. That bill will effectively repeal the requirement that the companies take out a million-dollar insurance policy for accidents where the driver at fault is not the Uber or Lyft driver, but the other car’s driver, if he or she has no or insufficient insurance to cover the damages. Instead, it reduces the companies’ uninsured motorist requirement to $60,000 per person and $300,000 per accident—a mammoth savings for the two companies.Â
This kind of deal is not without precedent in American labor relations. The Las Vegas hotel and casino union local, whose organizing chops are legendary, didn’t manage to unionize every hotel on the Vegas Strip solely through those chops, persuasive though they were. At a time when Steve Wynn was building the first generation of truly mega-hotels on the Strip in the 1990s, the Vegas local’s national union (HERE) agreed to line up the labor movement to join the hotels in lobbying for changes to tax codes that would enable very high rollers from abroad (in those days, Saudi oil sheiks, among others) to keep more of their winnings. Wynn and his fellow owners knew that a sizable share of their income came from these foreign gamblers, and sought that change to the tax laws to ensure the high rollers would keep coming, and spending, and losing.
Related:Â A Federal Appellate Court Finds the NLRB to Be Unconstitutional
No union has more effectively mobilized rank-and-file workers in unionization campaigns that the Vegas local (Culinary Local 226), but their lobbying effort on the hotels’ behalf convinced a critical number of Democrats to vote for the tax law change. That effort helped persuade Wynn not to oppose the local’s organizing at his hotels, which soon came to dominate the Strip and set a norm for labor relations there (which the local’s massive mobilizations of members have compelled the hotels to honor in the years since).
The second reason for the two companies’ reversal is the limitations that the bill granting the drivers collective-bargaining rights imposes on those drivers. As they will still be classified as independent contractors, they would likely run afoul of antitrust laws that forbid collective action from such contractors.
Accordingly, the bill does not explicitly grant drivers the right to strike—which, of course, is what ultimately underlies all worker power. They do, however, gain the right to bargain—minus an explicit right to strike, a kind of halfway house to full worker rights, but a considerable gain over no rights at all. While some unions have been cool to this form of semi-empowerment, SEIU has campaigned for it not just in California, but also in Massachusetts, where they backed a successful ballot measure last year that established a similar path to unionization for the drivers there. Both laws require a percentage of drivers—10 percent in California, 25 percent in Massachusetts—to apply to a (presumably friendly) state agency for union recognition. Other states with trifecta Democratic control of government might follow this course as well.Â
In a sense, the bill is part of an emerging blue-state response to the neutering of federal labor law, which has been well under way since Trump regained the presidency. As the National Labor Relations Act granted collective-bargaining rights only to most kinds of private-sector workers, Democratic-controlled states have often granted those rights to groups of workers left out of the NLRA: public employees (in the 1960s and ’70s), farmworkers (in California in the ’70s), and domestic workers (who won wage and hour standards in a number of blue states during the past decade). Independent contractors such as the Uber and Lyft drivers clearly fall outside the NLRA’s jurisdiction, too; the obstacles to their unionizing have been antitrust laws and the kinds of election campaigns that Uber and Lyft have waged against that eventuality.
The two California bills—which are both scheduled to come up for a vote in the next two weeks—presumably overcome both those obstacles: the one SEIU promoted by charting a path for independent-contractor collective bargaining minus the leverage of a strike threat; the one Uber and Lyft sought by offsetting their increased labor costs through a massive reduction in what they have to set aside for insurance. Not a deal made in heaven, but a deal nonetheless.
UPDATE: A sentence in the original article stating that the insurance requirements on the companies were those on their own drivers has been changed to reflect that the requirements pertained to insurance on accidents caused by other drivers who are uninsured or underinsured.