Previously, I wrote about the “preemption” problem with the Seattle Ordinance regulating ride-sharing services like Uber and Lyft. After Seattle passed the Ordinance, the federal Ninth Circuit Court of Appeals quickly stayed the Ordinance pending an appeal. The Ninth Circuit recently issued its opinion on the case. Although the law remains stayed due to antitrust law issues (that topic is for another blog…), the court’s decision provided a potentially game-changing decision on the preemptive force of national labor law as it relates to independent contractors.
As explained in my previous post, the National Labor Relations Act, which governs the formation of unions for most employees in the private sector, only covers “employees” and explicitly excludes independent contractors. Since the ride-sharing drivers are independent contractors, Seattle passed the Ordinance based on the reasoning that, if the NLRA does not cover these workers, then it should be permissible for local government to step in and provide its own collective bargaining regime. The counterargument, brought by the Chamber of Commerce on behalf of the ride-sharing companies and other interested employers, was that the exclusion of independent contractors from the NLRA’s coverage was purposefully intended to exclude them from any type of collective bargaining regime.
The Ninth Circuit agreed with Seattle on the preemption issue and found that the NLRA does not prohibit local governments from creating their own collective bargaining law covering independent contractors. The Court found that, in passing the statute, Congress did not intend to prohibit independent contractors from bargaining collectively. The NLRA only excluded them from coverage of its own provisions. Moreover, the Court noted that the Ordinance itself provided that any drivers who were found to be employees of a business would be excluded from coverage of the Ordinance and, instead, subject to coverage of the NLRA.
Thus, the Ninth Circuit’s decision gives the “green light” to local governments (or even states) to create collective bargaining laws for independent contractors. However, as in the Seattle case, local governments and independent contractors must beware of the potential antitrust implications of such arrangements. It is expected that, regardless of the NLRA preemption holding, interested municipalities will wait for the remainder of the case to run its course on the antitrust issues before creating their own collective bargaining laws.
Andrew MacDonald is an associate in the firm’s Labor and Employment Department, resident in its Philadelphia office.