Uber has given its blessing to a New York City drivers organization that formed as an affiliate with an established union.
The new Independent Drivers Guild, which claims an estimated 35,000 members in New York City, will give all current and future Uber drivers there a regular forum to discuss workplace issues, offer benefits such as discounted legal services, roadside assistance and life insurance, and provide an avenue to air grievances or appeal deactivation, according to a statement issued by the Machinists and Uber.
But the new Independent Drivers Guild also cannot engage in collective bargaining — a status that in the past has raised concerns that such labor associations are little more than “company unions” that appear to represent workers but fall short of vigorously advocating on their behalf.
And yet the new group’s size and its affiliation with an established union such as the Machinists — and the fact that the Uber drivers have so far been legally classified as independent contractors — also represents a compromise that also gives the group more leverage than most, labor activists said. The agreement also marked the first time Uber has sanctioned such a group.
“Today’s agreement is part of an ongoing effort by Uber to work more closely with drivers who use our app. That’s primarily about better communications, including listening to feedback more carefully,” Uber chief strategist David Plouffe said in a posting on the company’s Web site that praised the broader social and economic benefits of the so-called gig economy.
The move comes as Uber has both expanded service into new markets and met increasing resistance and regulation in others. On Monday, Uber and its smaller competitor, Lyft, suspended ride-sharing services in Austin, Texas after voters there decided against overturning city regulations that included fingerprinting drivers. Uber is also awaiting court approval of a proposed, multimillion-dollar legal settlement over labor disputes with drivers in California and Massachusetts.
As part of the five-year agreement announced Tuesday, the Machinists — part of the International Association of Machinists and Aerospace Workers, AFL-CIO — will be barred from unionizing Uber drivers or seeking to have them recognized as employees by the National Labor Relations Board (NLRB). Instead, the drivers will remain independent contractors for now — an important distinction that the company has sought to protect in its proposed $84 million settlement over labor disputes with drivers in California and Massachusetts.
Both Uber and the new Independent Drivers Guild also agreed to lobby for more equitable tax treatment among New York’s different types of licensed taxi service because, in practice, the current structure levies the highest taxes on Uber drivers. The Freelancers Union will also be working with Uber to create “portable benefits” to contractors in the on-demand economy.
“This deal is the best of both worlds for the drivers — it provides the immediate protections and support they need now to advocate for better earnings and benefits while retaining the right to unionize should they be deemed employees in the future,” Jim Conigliaro Jr, general counsel and assistant director of IAM District 15 who helped establish the new organization, said in a written statement. “For too long, drivers using Uber have been in a kind of limbo with no seat at the table, no representation and no mechanism to come together to make their voices heard. The Independent Drivers Guild changes that.”
The stakes are high on both sides. Unions have long tried to organize taxi and limo drivers with limited success, largely because of legal rulings that categorize drivers as independent contractors. Uber has built its business around keeping labor costs at a minimum by saturating markets with flexible drivers who have few obstacles to entering its service, such as fingerprinting or licensing regulations, and paying them commissions as independent contractors. That way, Uber avoids the sort of expenses that employers pay, such as Medicare or Social Security taxes, sick leave, medical insurance, and retirement benefits.
On Monday, for example, Reuters reported that if Uber drivers were considered employees, the company would owe drivers far more than the tentative settlement in California and Massachusetts. The news agency, citing recently unsealed court papers, said Uber’s proposed settlement of up to $100 million amounts to only about 12 percent of the potential $852 million drivers could receive in expense reimbursements, tips and damages, as calculated by attorneys for Uber drivers. A similar legal settlement involving Lyft and its drivers was rejected by a court as unfair.
But on Tuesday, people on both sides of the labor-employer divide hailed Tuesday’s agreement.
“Frankly, I think it’s kind of a remarkable achievement,” said Kevin P. Lynch, who earlier this month had helped form another Uber drivers association in New York City known as Amalgamated Local of Livery Employees in Solidarity, or ALLES.
Lynch, a co-chair of ALLES who had been a former organizer for the Machinists, said it would have taken ALLES three years to organize as many drivers as the new Independent Drivers Guild now claims. He also said the Machinists, which organized black car drivers in the past, were a good fit for the new organization.
“The machinists union is one of the most powerful unions in the United States. There is no aspect of a company union with them,” Lynch said. “I assured the Machinists we’re in solidarity with them. And we congratulate them.”
Eli Lehrer, president of the R Street Institute, a libertarian think tank based in Washington that is an enthusiastic supporter of the sharing economy, also welcomed the announcement.
“This is important not only for the gig economy, but because you might have a new kind of labor organization coming out of this,” Lehrer said. He said elements of the new drivers guild, such as offering drivers limited representation without compelling them to join the organization or pay dues, might become more widespread as more companies turn to contractors and ventures such as Uber expand their hold on the economy. “This to me is pretty exciting.”
–This post has been updated.
[Disclosure: as co-chair of the Washington Baltimore News Guild’s bargaining unit at The Washington Post, I’m a member of the Communication Workers of America. Washington Post owner Jeff Bezos is an Uber investor.]