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Uber, Lyft could score win in Olympia

A 2015 Teamsters' rally for the unionization of ride-hailing service drivers. Credit: Paul Roberts

A proposal in the state Senate would solidify the contractor status of drivers for companies like Uber and Lyft — a win for the companies — and set statewide regulations for the industry.

The proposal would create a single regulatory system in the state and effectively cancel the different rules and regulations imposed by counties and cities. Representatives of some of the companies characterized that as a boon, and called the current situation confusing. Members of the taxi industry and some drivers, however, claimed the bill would entrench a system already weighted toward companies like Uber.

The Seattle mayor’s office had little to say about the proposal, pointing to a vague statement by a city lobbyist that Seattle is monitoring the bill’s content and progress. A city law on the transportation network companies aims to let drivers unionize locally, but Mayor Ed Murray let it go into effect without his signature. An aide to Councilmember Mike O’Brien, who spearheaded the city legislation, last week said the office wasn’t familiar enough with the state bill to comment publicly yet.

Sponsors say the measure would help establish the transportation network companies statewide, be more efficient than a patchwork of regulations and make life easier for drivers, who must have business licenses in a variety of cities. It’s not clear if the bill is going anywhere. Even if it makes it out of the Senate, it would have to win approval from the Democratic-controlled House, where the concerns of unions trying to organize drivers could be a big factor.

A union-affiliated representative for a group of Uber, Lyft and other app-service drivers said the bill would neutralize Seattle’s regulation, which also allows drivers to set their own rates.

Dawn Gearhart, policy coordinator for the App Based Drivers Association, said, “It’s part of Uber’s national strategy, which is basically to go around local regulations.”

While the bill appears to cancel Seattle’s rule allowing driver unions, it wouldn’t stop them from eventually being recognized as union-eligible under federal law, although the process could take years.

That’s because the ability to unionize is ultimately controlled by the National Labor Relations Act, which is a federal law, said Seattle University labor law associate professor Charlotte Garden. Under that law, contractors are generally not allowed to unionize, but the National Labor Relations Board uses its own test to determine whether a given class of workers are contractors. A state classification, Garden said, wouldn’t directly affect that one way or the other.

Neil Dorrell, director of the unemployment insurance program at the state Employment Security Department said that his agency wasn’t officially taking a stand against the bill. But he travelled to Olympia to make sure that legislators were aware the bill would strip unemployment insurance protection from drivers in the state.

“If the bill passes,” Dorrell said, “they would all be categorically excluded from that coverage.”

As it stands, drivers in the state are usually told they don’t qualify for the insurance by their colleagues, or even by the companies themselves. But, Dorrell said, some have been able to successfully claim the insurance, and his agency reviews applications on a case-by-case basis.

Under the bill, local regulations on operations by the transportation network companies would effectively be cancelled and a new set of state rules would be imposed, including at least two background checks and a $5,000 fee for companies operating in the state. Drivers would also be categorized as contractors.

The classification of drivers as contractors, in particular, would be a win for the companies. Classifying a worker as a contractor as opposed to an employee reduces both paperwork and costs: Companies using contractors don’t have to withhold Social Security or taxes from their earnings, offer health-care benefits, or pay into unemployment or workers’ compensation programs.

But under state and federal laws, being a contractor is also supposed to come with increased flexibility for workers, including the ability to set their own hours and even hire their own employees. At least one major lawsuit has contended that Uber is misclassifying its employees, and using that misclassification to avoid costs.

The bill’s prime sponsor, Sen. Curtis King, R-Yakima, said that classifying drivers as contractors makes intuitive sense.

“They decide when to be Uber drivers and when not to be Uber drivers,” King said. “To me, that’s an independent contractor kind of thing.”

Paul Kajanoff, president of airport taxi firm Shuttle Express, said the proposal amounted to a set of special, less-safe rules for TNC drivers than what riders expect.

“I could sign up for Uber after I get done with my 20 hours at 7-11, and pick your daughter up to take her wherever,” Kajanoff said, referring to state regulations on the maximum number of hours taxi drivers can work in a day. “If I did that in a van, the [state Department of Transportation] would come down on me huge.”

Cindi Laws, a representative of the Evergreen State Taxi Association, a trade group that includes taxi companies in Everett, Spokane and Seattle, said that the bill would solidify unfair advantages for Uber drivers over taxi drivers.

“The annual fee in this bill is only $5,000 for a company like Uber, which is valued at $70 billion,” Laws said. “In comparison … each [individual] taxi owner pays more than $1,600 each year in licenses and fees.”

Lauren McCloy, the legislative director for the state Utilities and Transportation Commission, told a gathering of legislators that her agency supported the idea of creating a unified system of rules, but worried about the way the proposal goes about it.

“We do have a concern about this piecemeal approach to regulating passenger transportation,” McCloy said, referring to idea of regulating TNC drivers differently from taxi drivers. “It does create an uneven playing field for competition, and frankly it creates confusion for regulators.”

Uber’s manager of public affairs in Washington, Caleb Weaver, responded that the bill is still being perfected, and that substantive changes to its language were likely in coming weeks. Weaver spoke at the bill’s public hearing last Wednesday.

Sen. Steve Hobbs, D-Lake Stevens, a centrist Democrat who co-sponsored the bill with King, said he wasn’t against the ability of drivers to unionize, generally, but that he wanted to make sure that non-union drivers would also be able to work. Hobbs also called protecting drivers a priority, but didn’t have a ready answer for how that would fit with a change in the unemployment benefits picture.

Having had a public hearing, the bill will have to be approved by the Senate Transportation committee before it can go to the floor of the Senate for a vote, then over to the House of Representatives.

Crosscut’s Tess Riski contributed reporting to this story.

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