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Despite Donald Trump’s unprecedented war on unions, there remain ways, as I noted yesterday, that Blue states—states with Democratic trifecta governments—can fight back on workers’ behalf. Last week, California did just that, as the Democratic-dominated state government helped craft a deal that would permit Uber and Lyft drivers to form unions and bargain collectively with those companies. As had not been the case before, Uber and Lyft signed on to the deal.
This was the second such effort on the part of the state’s government. In 2019, the legislature passed and Gov. Gavin Newsom signed Assembly Bill 5, which declared Uber and Lyft drivers to be what they’d always appeared to be: employees of those companies, not independent contractors, and therefore covered by statues like the state’s minimum wage law and eligible to unionize if they so desired.
But shortly after Newsom signed the bill, Uber and Lyft poured millions of dollars into a ballot measure exempting them from the new law and permitting them to keep treating their drivers as independent contractors. Claiming that their ballot measure, Proposition 22 on the November 2020 ballot, would actually increase drivers’ incomes, and throwing more than $100 million behind that spurious claim, the companies prevailed, as the measure won the support of 59 percent of an understandably confused electorate.
California courts upheld most of Proposition 22’s restrictions but left intact just enough workers’ rights so that there remained, at least in theory, a way that drivers might still be legally able go union. It required threading a needle in which they remained independent contractors, thereby limiting what their union could do. Even so, there was no reason why Uber and Lyft would agree to that.
Last week, however, talks between the companies, the state’s largest union (SEIU), and members of the legislature and the governor’s office produced a deal. Both the companies and the union agreed to the terms of a bill that would keep the drivers classified as independent contractors (and therefore not under the jurisdiction of the soon-to-be Trumpified and hence, anti-union National Labor Relations Board) but would recognize their right to bargain collectively with those two companies. At a time when Trump’s unilateral abrogation of contracts with federal workers has already reduced the number of union members in the United States by roughly half a million, this bill could potentially bolster union ranks by a similar number.
There were two reasons for Uber’s and Lyft’s about-face. The first was a pledge from Newsom and legislative leaders to enact a separate bill being pushed by the two companies alongside the one granting drivers collective bargaining rights. That bill will effectively repeal the requirement that the companies cover each of their drivers with a million-dollar insurance policy (less any amount that the drivers take out on themselves); instead, it reduces that requirement to just $60,000 per driver—a mammoth savings for the two companies.
This kind of deal is not without precedent in American labor relations. The Las Vegas hotel and casino local union, whose organizing chops are legendary, didn’t manage to unionize every hotel on the Vegas “Strip” solely through those chops, persuasive though they were. At a time when Steve Wynn was building the first generation of truly mega-hotels on the Strip in the 1990s, the Vegas local’s national union (HERE) agreed to line up the labor movement to join the hotels in lobbying for changes to tax codes that would enable very high rollers from abroad (in those days, Saudi oil sheiks, among others) to keep more of their winnings. Wynn and his fellow owners knew that a sizable share of their income came from these foreign gamblers, and sought that change to the tax laws to ensure the high rollers would keep coming, and spending, and losing.
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