Workplace

How Uber and Lyft compromised with labor in Washington state — and kept drivers from becoming employees

Here’s the story of how Washington avoided a blowout Proposition 22 fight, and how the gig work companies won contractor status for their drivers.

Washington State Capitol building

Washington state Gov. Jay Inslee signed a bill into law that confirms — for now — the contractor status of Uber and Lyft drivers.

Photo: David Ryder/Getty Images

For gig companies, the war to cement Uber and Lyft drivers as contractors in California was bloody, expensive and a massive blowout. In Massachusetts, a coalition of gig work companies has already broken state campaign-spending records over a potential similar ballot measure.

But this year, in Washington state, the decision to enshrine gig workers as contractors — not employees — wasn’t even a fight. Instead, it was the product of a backroom, measured and quietly intense discussion that everyone involved agreed is rare in today’s political climate.

With very little fanfare, Washington state Gov. Jay Inslee signed a bill into law at the end of March that confirms — for now — the contractor status of Uber and Lyft drivers, protecting the respective companies from the threat of being forced to classify their workers as full-time employees. The bill also grants first-of-its-kind benefits and protections to drivers: a guaranteed minimum wage, just-cause firing protections and access to some of the state labor systems that are designed to protect workers from company violations of labor laws. The bill was endorsed not just by the gig companies but also by the local unions and labor politicians that typically oppose such laws. Meanwhile, national labor groups vehemently opposed the bill in a rare public fracture.

“Simply put, there is no better place in the country to drive for Lyft or Uber than today in Seattle, where we have already had some local legislative success, and soon, then we will have in the state of Washington,” Kerry Harwin, the communications director for the Drivers Union, told Protocol. The Drivers Union, an advocacy group affiliated with a local Seattle Teamsters union, has advocated for a coalition of app workers and drivers in the Seattle area and in Washington state for years, and last year won new rights and benefits for those workers in Seattle.

“There will be no higher statewide minimum pay rate in the country, sick pay, workers’ comp benefits,” Harwin said. “When it comes to protection against unfair terminations, we’ve achieved a just cause standard for terminations of Uber and Lyft drivers in Washington, which is a higher protection than people in an employer-employee relationship have in the state.”

The battle over whether gig workers should be classified as employees or contractors has been brewing since before gig companies like Uber, Lyft and DoorDash were founded (taxi drivers have always been contractors, for example), but as these companies and the size of their workforce grew, so did the importance and scale of the fight. If states or the federal government decide to classify gig workers as full-time employees, the companies would be required to pay into traditional health insurance models, payroll taxes and other legal systems that provide benefits and protections to full-time workers. Full-time employees also have more organizing, unionizing and bargaining rights under the National Labor Relations Act.

Most of these gig companies likely could not afford the costs that would come with millions of employee-drivers, and the companies also say that they would be forced to take away flexibility if required to classify them as employees. The majority of gig workers also don’t drive for Uber or Lyft as their primary job, making classification especially messy for all but the small percentage who work solely for the gig platforms. But labor groups and traditional unions argue that flexibility wouldn’t need to change, and that the percentage of people who work primarily for these tech companies deserve to be offered benefits and protections just like, for example, the engineers who work at the gig companies’ corporate offices.

In Washington state, the new law does not directly say that gig workers must be classified as contractors. By skirting the classification issue, driver advocates and gig companies were able to reach agreements on protections and rights that individual drivers want and could benefit from. At the same time, the gig companies succeeded in their push for the law to be structured so that as long as those companies provide these new benefits and protections, their workers remain contractors, preventing any classification fight like the ballot measure in California.

A liberal, pro-labor, first-term state congresswoman was the driving force behind the bill’s unlikely success. “I was approached by drivers themselves, and Teamsters and Drivers Union, and they said, ‘Look, we are having really great conversations with Uber and Lyft, about what a bill could be around worker protections and benefits and all of that stuff,’” Liz Berry, a Democrat for Washington’s 36th District, told Protocol. “They had concepts mapped about what things could look like generally, and I just started putting words on paper.”

“[Rep.] Berry was really eager to dive into a really complicated issue,” Jen Hensley, Lyft’s head of Government Relations, told Protocol. “We really just sort of started to sit down, ask, ‘What does the solution look like?’ The thing about this group that really I think made us successful at advancing this was really that we kind of came together as often as needed to have real, candid conversations,” she said.

Harwin said that giving individual drivers what they want is, at the end of the day, more valuable than fighting about how those workers are classified.

“The history of employment law in the United States is extremely troubled,” Harwin said. “One way to remedy this very problematic American past is to make everyone employees. But another way to address this is to make sure that no matter what your arrangement, you should have the protections that everyone should have.”

While the local Teamsters were intimately involved in crafting and then advocating for the bill’s passage, the local Teamsters’ own national leader vehemently opposed it. “This will be the model that sets the tone for the entire country,” Sean O’Brien, the president of the International Brotherhood of Teamsters, said before Inslee signed the bill. Other national labor groups also urged state Democrats to vote against it. Rebecca Dixon, the executive director of the National Employment Law Project, said that the bill “sets a dangerous precedent” by giving gig-based companies “special treatment” and allowing them to manipulate laws intended to protect workers.

“We are aware that there have been some criticisms,” Harwin said. “I think that what’s important to keep in mind, when you look at who those criticisms are coming from, by and large it’s not anybody who has been part of this process or at the table. It’s not people who have sat with the drivers the way we have. Ultimately, our process has been driven by our deep interactions with drivers and listening to what they want.”

Berry, who called herself a “strong pro-labor Democrat” in conversation with Protocol, said that realistically, she believes it would not be possible to get drivers the rights and benefits enshrined in this law if they had insisted on employee classification. “We are never going to get a deal to get our drivers all of these benefits and protections if we fight classification,” she said. “The way we wrote the bill, if the federal government — and I encourage this action — decides to classify these workers as employees to the NLRB, they can do that. And I hope to God Marty Walsh [the Secretary of Labor] does that,” she said.

Labor experts consider President Biden and Walsh to be the most pro-labor political leaders the White House has seen in decades. Biden has endorsed the PRO Act, a bill that would dramatically reshape U.S. labor laws in ways that could lead to union expansion and would also give contract drivers like those in Washington state more union and organizing rights.

“We’ve got the PRO Act before Congress in Washington. That would change who had the right to collective bargain. Some of this is not really a local issue; we would love an expansion of who has the right to collective bargain,” Harwin said. “Our guiding light is driver demands, and it feels like there are those who would rather have an ideological battle than deliver to drivers what they want most.”

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