Massachusetts Ballot Measure Criticized for Creating Gig Worker ‘Company Unions’
Typically, industry would fight tooth and nail against a new state law making it easier for their workers to collectively bargain. You might expect to see the kind of campaign Uber and Lyft mounted in California in 2020, where the two companies broke state spending records, unloading $220 million on a ballot initiative to undo baseline labor protections for their gig workers.
But in Massachusetts, the ridesharing apps are publicly saying they won’t oppose a November ballot measure backed by the Service Employees International Union, Question 3, which allows drivers to at least nominally form a union. The companies’ tacit support is likely because the law would give workers a mere facsimile of bargaining rights, without officially changing their designated status as independent contractors.
This misclassification is how tech companies like Uber and Lyft skirt federal labor law to avoid providing workers with the benefits and protections of full-time employees. Lower labor compensation is the only reason these companies are remotely profitable. Rideshare drivers are not guaranteed minimum wage, overtime pay, health care benefits, Social Security, unemployment insurance, paid sick days, family leave, and principally the right to unionize.
The latter is technically the case because independent contractors cannot legally band together to fix wages, or they’d be running afoul of collusion laws.
To work around that, the ballot initiative essentially carves out a pathway for rideshare drivers to legally cartelize and organize a sectoral bargaining unit recognized by the state, not by the prevailing National Labor Relations Act.
“We don’t see another path for these drivers to have a shot at a union … this will be a major improvement,” said Roxana Rivera, assistant to the president of the Service Employees International Union (SEIU) Local 32BJ, who is leading the ballot measure campaign.
But the measure has become a divisive issue in the broader labor movement. Because it effectively concedes independent contractor status, other labor leaders have criticized the initiative for accepting an erosion of labor standards that could set a bad precedent for other sectors where gig work has started to spread, such as nursing. Massachusetts Drivers United, a rank-and-file group, has spoken out against it, because it doesn’t cover other app-based workers such as food delivery drivers.
The labor movement has often been forced to accept half a loaf to improve upon the status quo. But sometimes a half loaf is already stale and moldy.
REGULATORY SCRUTINY OF UBER AND LYFT is at a high point, with state legislatures and the federal government eyeing a crackdown on the core business model of labor exploitation. With resurgent organizing over the past four years, labor sees a major opening to push for rideshare reforms before this opportunity passes.
But so far, the tech companies have scored huge victories, most notably in California. In 2019, AB 5 passed into law, closing loopholes for worker misclassification and ensuring that rideshare drivers and other independent contractors like port truckers would rightfully be considered full-time employees.
To try and kill the bill before passage, Uber and Lyft held private negotiations with major labor unions (including SEIU), seeking to preserve independent contractor status but create some form of a company labor union. Both firms said they’d be willing to offer some benefits, like retirement savings and paid time off. This proposal was similar to a deal the apps made with the International Association of Machinists and Aerospace Workers (IAM) in 2016 to form a labor association called the Independent Drivers Guild.
These types of associations aren’t seen as adequate because they “look like they represent labor interests, but really are just company-backed,” said Veena Dubal, professor of law at the University of California, Irvine, who’s researched the gig economy and specifically Uber for a number of years.
These types of associations aren’t seen as adequate because they “look like they represent labor interests, but really are just company-backed,” said Veena Dubal.
When reports surfaced about these private meetings, there was uproar in the labor community. SEIU’s own local president in New York, Hector Figueroa, wrote an op-ed where he argued: “Collective bargaining without a minimum wage, which is what this would be, means that we are forced to bargain for what should already be rightfully ours.”
Once AB 5 passed, Uber and Lyft immediately challenged it in 2020, financing their own ballot initiative, Prop 22, to exempt drivers from the law’s protections, keeping them designated as contractors. On the strength of the astronomical $220 million investment, Prop 22 passed, undoing all the work that had gone into the bill. It was a huge setback for drivers, arguably putting them in a worse position today, since they are now codified into state law as contractors.
But that loss hasn’t stopped other bills similar to AB 5 from getting introduced in other state legislatures. The PRO Act in Congress includes similar reforms. The Department of Labor also has an independent contractor rule that Uber is trying to block because it would change some aspects of their drivers’ employment status. Kamala Harris’s brother-in-law and adviser Tony West is the general counsel for Uber, and has spearheaded that effort.
However, not all of these bills being introduced at the state level are created equal.
KNOWING THAT THEIR BUSINESS PRACTICES ARE UNDER THREAT from both regulators and unions, Uber and Lyft have put into motion their own legislative drive to preempt stronger worker classification bills. They’re trying to make some concessions to labor, similar to what they’d proposed in the run-up to AB 5’s passage, offering limited benefits and even some union presence, as long as it doesn’t impede contractor designation.
For example, in Washington state, both the Teamsters local and Uber endorsed a bill to provide sick pay, some workers’ compensation protection, and an appeals process for deactivations, while enshrining a contractor classification.
A similar dynamic is playing out in Massachusetts. Since 2021, there have been two competing bills.
Teamsters Local 25 and the Massachusetts AFL-CIO backed a similar version to AB 5 to make rideshare drivers full-time employees with all the accompanying protections. This coalition also fought against an Uber/Lyft ballot initiative modeled on Prop 22. The Massachusetts Supreme Court ultimately ruled that the initiative was unconstitutional, a major victory for the drivers’ rights campaign. At the same time, then-Attorney General Maura Healey brought a bold lawsuit against both companies for misclassifying workers in violation of state law.
Meanwhile, there were two bills supported by SEIU and IAM. The first would give drivers access to many of the benefits of a full employee, such as a minimum wage. The other would set up a pathway for sectoral bargaining units, virtually identical to what became the current ballot initiative. Both worked around the edges of drivers’ official employment status.
Labor leaders such as the Association of Flight Attendants’ Sara Nelson have weighed in on this state fight. When asked directly about the dueling bills in Massachusetts and fighting for employment rights, she said, “Are we building a fighting movement or are we just trying to get people to pay dues, that’s the question and that should give you the answer to that question too.”
SEIU has frequently championed sectoral bargaining as the best avenue for some industries to get any union representation, as they’ve done for child care workers and personal care nurses in the state of Massachusetts.
But as Sara Nelson’s answer suggests, not all labor leaders are fond of sectoral bargaining, which is seen as top-down and prone to ineffective compromises favoring companies. Because these union drives don’t require as much organizing to grow, the sectoral model can run the risk of not mobilizing an active and engaged union base, who won’t see all the benefits of the labor movement. Strikes and picketing aren’t as common either.
UC Santa Barbara labor historian Nelson Lichtenstein has put it a bit more bluntly. When describing a similar piece of rideshare legislation proposed in New York for sectoral bargaining, he wrote, “The appeal of such policy to an embattled union movement is twofold. The participating unions would quickly enroll tens of thousands of new workers and secure an enormous new revenue stream. It is unlikely that such a union would mean much to most workers, especially part-timers.”
SEIU argues that they’re trying to meaningfully change the status quo for drivers to get some representation while managing a fraught political reality. As of a few months ago, Uber and Lyft had supported five separate proposed ballot measures to get around the 2022 court ruling and codify independent contractor status. One was blessed by the state Supreme Court, which would have been a real threat, leading to millions in spending.
But rather than fighting Uber and Lyft, the state and unions appear to have opted for appeasement.
UNDER QUESTION 3, A SUBSET OF “ACTIVE DRIVERS” defined by minimum criteria can first sign up for a bargaining unit and then collect authorization cards from 25 percent of the unit to become an official state union. That sectoral unit then bargains with the company for a three-year contract covering all drivers. The Massachusetts secretary of labor would oversee unfair labor practice charges and mediate the contract negotiations, to which it has to give the final stamp of approval.
Sectoral bargaining arrangements are often proposed for industries with a diffuse, difficult-to-organize workforce. Ridesharing arguably fits that makeup since it isn’t delineated geographically by individual local shops; workers are all just on the same app.
Uber and Lyft withdrew their other ballot measures as part of a massive settlement they struck in June with the state over the worker misclassification case originally brought by Healey, who is now governor. That case had already gone to trial, with Tony West sitting in the courthouse, when both parties decided to hash out an agreement.
As part of that settlement, rideshare drivers are guaranteed some quasi-employee protections, such as a minimum $32 per hour while driving, a stipend to qualify for a health insurance plan, paid family and medical leave, protections against discrimination, and $175 million in back pay.
But not going through the court process leaves independent contractors untouched, without getting workers all of the same protections. Uber and Lyft praised the settlement specifically for that reason.
Many drivers in Massachusetts will still make less than the minimum wage, because they’re not compensated for the time they spend in between trips without a passenger physically in the vehicle or en route to pick up one.
One UberX driver, Prisell Polanco, told the Prospect the $32 minimum is well below what he already typically makes on a trip. He’s supporting the ballot measure because he hopes a union will help get him the wages and protections of an employee, along with addressing the pernicious problem of deactivations many drivers face, depriving them of work without recourse.
That settlement set the table for the current ballot initiative, which essentially builds off the agreement by not touching employment status but adding a sectoral union right. Gov. Healy is backing the ballot measure.
Critics believe that the main design flaw in this approach is that the bargaining unit will have to slowly negotiate for protections already covered for most other workers.
“The union created will be inherently weak because there will be a large number of part-time Uber drivers who will probably not be involved in any solidarity action,” added Lichtenstein. One concerning sign is that the ballot measure language does not mention the right to strike, which is covered for most other unions federally certified under the NLRA. The measure states that if the company and the bargaining unit can’t reach an agreement within a set amount of time then an arbitrator would step in to mediate a final contract.
There are broader implications for the ballot initiative. Some people worry that it will establish a model for other states and other sectors. Gig apps have started encroaching into numerous other sectors, like nursing or personal care, with part-time work to fill staffing shortages.
“This would set a bad precedent that it’s OK not to provide full employment rights but still work with unions, which just takes us backwards,” said Dubal.
Dubal also notes that there’s a whole set of new threats Uber poses, such as algorithmic discrimination, where the same drivers are paid different rates for the same trips without knowing it. The algorithm sifting through volumes of data maximizes what the company can charge on the passenger’s side and minimizes the cut given to workers, pocketing the difference.
These are just a few of the unique challenges that a union needs to negotiate to fix, rather than getting basic employment benefits theoretically already won for American workers.
Luke Goldstein is a writing fellow at The American Prospect. He previously worked as a reporter/research associate at the Open Markets Institute and interned at Washington Monthly.