Seattle Driver Ordinance Cuts Off Federal Preemption Challenge


 

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A federal district court in Washington recently held that a Seattle ordinance that provides for-hire drivers with a means of bargaining collectively doesn’t intrude on federal labor law. The case showcases an innovation in efforts to regulate app-based ride-hailing services and represents a potential opening for new labor organizing in this sector. Chamber of Commerce of the U.S. v. City of Seattle, 2017 BL 267659 (W.D. Wash. 2017).

The ordinance, which came into effect in January 2016, provides a mechanism for drivers to bargain collectively with companies like Lyft and Uber that contract for their services. It applies only to for-hire drivers who are independent contractors and not employees.

After Teamsters Local 117 notified three Chamber of Commerce members that it would like to represent their drivers in collective bargaining under the ordinance, the Chamber sued in federal district court. Among other things, it argued that the ordinance is preempted by the National Labor Relations Act. The city moved to dismiss.

The Chamber first argued that the ordinance allows local officials and courts to make factual determinations about employee status that should be decided under federal labor law by the NLRB. This argument was a non-starter because no party in the case had alleged that the drivers actually are employees.

A second argument went that Congress intended to leave independent contractors free of regulation and open to the “free play of economic forces” because, like supervisors, they were excluded from the meaning of “employee” when the NLRA was amended in 1947. Here, the court noted that Congress included an express preemption provision in the NLRA related to supervisors and not to contractors. The court also reasoned that the unionization of supervisors was deemed to be a threat to the purposes of the NLRA, and that there is no indication that allowing contractors to participate in collective action would threaten either the independence of labor unions or management rights.

Dismissing the Chamber’s suit, the ruling is a significant, if incremental, victory for local economic regulation, on one hand, and the labor movement’s efforts to organize new cohorts of workers, on another.

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