The US Chamber of Commerce says that Seattles controversial new Uber and Lyft ordinance violates federal law.
The US Chamber of Commerce says that Seattle's controversial new Uber and Lyft ordinance violates federal law. The Stranger

If the looming legal showdown between ridehailing app companies and the city of Seattle ever gets made for TV, here's a surefire way to get shitfaced: Take a drink every time you hear the letters N-L-R-A.

They stand for the National Labor Relations Act. And today, the US Chamber of Commerce issued a statement on why it thinks the city of Seattle is violating it.

Last month, the Seattle city council passed a controversial new ordinance that allows Uber, Lyft, and other ride-for-hire drivers to collectively bargain with the owners of their apps. The Chamber has said this new ordinance violates federal law twice over: the NLRA and antitrust law.

I want to explain why this could become a defining legal fight of the 21st century, but I have to go into some wonky legal territory in order to do so.

You could bear with me. Or you could crack open a beer and start a reading drinking game now. (Do it!)

*clink* Let's begin! Dean Hammel/Shutterstock

First, let's back up a minute. Ostensibly, the Chamber, Uber, and Lyft are upset about Seattle's new ordinance because it aims to give drivers more control over their businesses. The law did this in a pretty unique (and some would say crazy) way. The ordinance gave the city the ability to set up its own system in which commercial drivers could organize, with the oversight of the city, in coordination with a nonprofit or union that bargains on those drivers' behalf. Simple! (Not sounding simple? Here, have a drink: NLRA!)

There's a reason why the city council chose to go this route. Because Uber and Lyft say that their drivers are independent contractors and not employees, their drivers don't automatically get to enjoy the same workplace protections that "employees" have under the law. (This includes collective bargaining rights.) Some drivers in California and Washington State want to be recognized as employees, but they've already taken that issue to the courts. In order to skirt the ongoing employee vs. independent contractor classification battle, the city decided to grant drivers the ability to collectively bargain separately from that employee vs. independent contractor fight. Hence, the complicated mechanism.

In its statement today, the Chamber claimed that the Seattle law—complicated mechanism included—violates the NLRA. “In amendments to the National Labor Relations Act, Congress expressly excluded independent contractors from collective-bargaining requirements," Lily Fu Claffee, chief legal officer of the U.S. Chamber, said. "The City of Seattle—and any state or other municipal government—cannot dictate otherwise."

But according to Dmitri Iglitzin, a labor attorney for Teamsters Local 117 (which advocated for the Seattle ordinance), the Chamber's NLRA (attention: you should be several drinks in at this point) argument is moot.

Here's how Iglitzin explained it to me today over the phone:

I call Seattle’s new ordinance the “have it your way” law. Uber and Lyft insist these aren’t employees; they’re independent contractors.  Okay, they can have it their way; but, if the drivers are independent contractors, then they are completely outside the scope of the NLRA, which governs the employer-employee relationship only, and nothing in that law prevents the city from regulating relationships between businesses and independent businesspeople. It is true that Congress expressly excluded independent contractors from being considered employees under the NLRA, but there is no indication the Congress intended independent contractors to not be given collective bargaining rights. 

Iglitzin cited two big pieces of evidence showing how independent contractors can be granted rights outside of the NLRA. The first: public employees. The state of Washington currently allows public employees to collectively bargain, even though public employees aren't covered under the NLRA.

The second example Iglitzin mentioned is California. In the '70s, California gave farmworkers—who also aren't covered by the NLRA—the ability to collectively bargain under the California Agricultural Labor Relations Act.

But the NLRA (pssst: drink!) piece isn't the Chamber's only contention. In the same statement, the Chamber also claimed that the Seattle ordinance violates federal antitrust law.

This argument, according to Seattle University law professor Charlotte Garden, is where things might get interesting.

"It is true that under normal circumstances independent contractors may not engage in collective action because of antitrust law, but there is an exception and it's called the 'state action defense,'" Garden said. "That defense says that when a state decides to preempt competition or put a different system in place of competition, that it can do so—as long as it maintains enough active support of the system it puts in place."

To Garden, the question is whether the state action exemption to federal antitrust law will apply to the Seattle ordinance. "The City Council is definitely aware of this issue and aware of this defense," she said. "It's a bit of a novel issue. It's different from other cases the Supreme Court has decided in the scope of the state action defense."

The reason why this fight matters is that it could determine what happens to other kinds of independent contractors, like all those people who run errands for our growing gig economy. The fight could also have significant repercussions for cities that want to pass more progressive labor policies than their states or the federal government.

Whew. That wasn't too bad, right? If it was, get ready for a long legal battle ahead. Also: NLRA!