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What California should do next to help Uber drivers

Recognizing them as employees was a fine first step. Letting them unionize is crucial.

Supporters of a bill that would classify many gig economy workers as employees rally at the California State Capitol in Sacramento on Aug. 28. (Rich Pedroncelli/AP)

The struggle for gig workers’ rights took a big step forward this week when the California legislature passed a law classifying many such workers — including Uber and Lyft drivers — as “employees.” Once it is signed by Gov. Gavin Newsom (D), the law will grant workers in California critical protections such as minimum wage, overtime pay, workers’ compensation and unemployment insurance — all of which they currently lack. Uber has vowed to fight application of the law to its drivers through litigation or repeal by referendum.

It’s a significant victory for the gig workers, and California’s move could lead other states to act, but there’s a problem. It’s that the new law fails to offer gig workers one of the most important employment rights of all: the right to form a union. As important as minimum wage and overtime pay are, they are minimum protections that fall far short of ensuring that workers earn what they need; only a union and a collective bargaining agreement enable workers to demand and secure anything beyond these minimum standards. But even more important, a substantial body of economic research confirms that basic workplace protections are adequately enforced only when there’s a union on the scene.

Researchers find that overtime pay compliance is significantly higher for union workers, for example, that wage discrimination is lower in unionized companies and that unions increase compliance with occupational safety and health laws. This last effect can be seen most dramatically in the context of workplace deaths: Recent research shows that for every percentage-point increase in unionization in a state, there is a 2.8 percent decline in occupational fatalities.

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The reasons for this are straightforward: First, unions ensure that workers who stand up for their rights aren’t fired for doing so. Second, unions make sure that workers know what their rights are in the first place (many lack such knowledge). Third, unions can bring claims on behalf of members that are too small to be brought individually but that the union can aggregate into a single significant case. So, there is a serious risk that California’s new law will give workers paper rights but not real ones.

To prevent that outcome, California ought to enact a law that grants gig workers the right to unionize and to collectively bargain with their employers. States don’t ordinarily have the right to take that action. In general, under the National Labor Relations Act, only the federal government can extend union rights to private-sector workers. But ironically, the Trump administration created an opening for state-level action by opining in May in a case involving UberX and UberBlack drivers that those workers are not covered by the NLRA — that they don’t fall within the law’s ambit.

Uber drivers didn’t lose a case under federal labor law. Rather, the general counsel of the National Labor Relations Board — the administration official charged with enforcing the NLRA — made it clear that he will not, in any instance, enforce federal labor law on behalf of gig workers. By excising gig workers from the NLRA entirely, that decision leaves room for state action. There’s a general principle that federal law in this area preempts state law, but if the gig workers aren’t covered by the NLRA, that principle doesn’t apply.

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California could even devise a better set of union rights than what the outdated federal law provides — thereby making powerful unionization a realistic possibility. The federal rules give employers too many tools for subverting workers’ preferences, while they give unions too few tools for organizing, especially among dispersed and fluid workforces (like Uber’s). Under federal law, for example, employers can require workers to make their choice about unionization in a central workplace at a single time, under the coercive eye of their employer. Federal law also allows employers to demand that workers listen to a barrage of anti-union messages while, at the same time, barring non-employee union organizers from the workplace — physically or virtually.

A state law, in contrast, could give unions a right to contact drivers through the same technology that allows Uber and Lyft to coordinate rides, while giving drivers the right to register their choices about unionization through whatever technologies are easiest for the drivers. And California could establish that collective bargaining would take place between the drivers’ unions and all the relevant firms in the sector. This kind of “sectoral bargaining” — common in Europe — also helps workers, because among other reasons, it ensures that unionized firms aren’t put at a competitive disadvantage relative to nonunionized ones, because all firms in the sector would be covered by the same wages and working conditions. This in turn reduces, if not eliminates, each firm’s incentive to union-bust, and therefore frees employees to organize the powerful unions they want and deserve.

With its new law, California has taken an important step toward improving the lives of gig workers. But now the state has the chance to go even further.