ARI SHAPIRO, HOST:
Uber is a global phenomenon thanks, in part, to its flexible labor system. Uber drivers are treated as independent contractors. Well, Seattle has just passed a law complicating things for the company. The law allowed Uber drivers and other drivers on contract to unionize. NPR's Aarti Shahani reports.
AARTI SHAHANI, BYLINE: Let's start by fact checking David Plouffe. The policy guru at Uber, who used to be the campaign guru for President Obama, did an interview with NPR last month. On the right to unionize, as Seattle was proposing, Plouffe said...
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DAVID PLOUFFE: Well, there's very clear federal law on this that, you know, independent contractors cannot be organized. And again - so that's clear.
SHAHANI: Well, actually, it is clear that he's wrong, according to some labor experts.
WILMA LIEBMAN: My view is the opposite.
SHAHANI: Wilma Liebman, who served on the National Labor Relations Board under presidents Clinton, George W. Bush and Obama - and here is Matthew Finkin, a labor law professor at the University of Illinois on contract workers.
MATTHEW FINKIN: Because they're excluded from federal coverage doesn't mean the federal law meant for them to have no rights at all.
SHAHANI: The federal right to unionize covers employees and does not cover three big categories - farmworkers, domestic workers and contract workers. Uber, as well as Lyft and other app-enabled platforms, insist their workers are contractors. So by that logic, they aren't covered by the federal statute. And Liebman says they're fair game for cities and states to weigh in, plug in the holes left open by the feds. That's what California did with farmworkers back in the 1970s.
LIEBMAN: I don't think anyone has ever said that California can't do that.
SHAHANI: Putting aside labor laws, stille, critics of the Seattle law could raise antitrust issues. If drivers are contractors, legally, they're like solo doctors, says Finkin.
FINKIN: Let's say doctors all band together, and they say, we will agree that none of us will accept less than $1,500 for a knee operation. We're fixing the prices of knee operations.
SHAHANI: That would be illegal. But Finkin says the Seattle law was written quite cleverly. Let's say drivers in the company wanted to change the rates for customers. They'd have to go before a city agency. So arguably, they can't fix prices.
FINKIN: Any agreement they make with Uber has to be approved by the city.
SHAHANI: In court, the legal experts say Seattle's law has real substance. In real life, however, it may not get used. Very few workers - those classified as employees - exercise their right to collectively bargain, and only 6.6 percent of private sector workers are even in unions. Arguably, the campaign in Seattle is a bit like fighting to own a gun that doesn't shoot.
DAVID COWAN: I don't know how many people you need to actively bargain in order to make it an important factor in the labor force.
SHAHANI: Venture capitalist David Cowan with the Bessemer Venture Partners in Silicon Valley - he says even if drivers try to make use of collective bargaining rights, Uber is a powerhouse that's adapted to obstacles before. Take airport. When you land and summon an Uber, you get different instructions depending on local rules. In Seattle, Cowan predicts, Uber may limit its relationship with drivers who organize.
COWAN: Change its policy so that it'll only give a driver three fares a day instead of 30 or maybe will just avoid Seattle altogether.
SHAHANI: That said, the labor attacks are having a clear impact. This year, Cowan decided to not invest in smaller startups that use crowd-sourced labor even though they were attractive opportunities because the legal risk was too high. Aarti Shahani, NPR News.
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