Union, Rideshare Companies Back New Washington State Law Granting Benefits to Independent Contractors

By Daniel Chasen posted 04-08-2022 00:00


The contentious worker classification issue has drawn together unlikely bedfellows, as Uber and Lyft joined Teamsters Local 117 in Washington state to help pass a law providing benefits including paid sick leave and minimum per-trip pay, but maintaining drivers’ independent contractor status. The measure, which is not universally supported by unions, could provide a model for other states to follow as a potential “third way” between employee and independent contractor classification.

John Scearcy, secretary-treasurer of Teamsters Local 117, said the union was “proud to stand in solidarity with Uber and Lyft drivers in winning their demands for pay raises” and other benefits. 

In the backdrop was California’s Prop 22, which in 2021 exempted Uber, Lyft, and other gig drivers from a previously passed California law imposing employee status on them via the so-called “ABC” test. To be exempt, drivers would have to receive occupational accident insurance, health benefits, and guaranteed minimum earnings. The gig companies spent over $200 million promoting the measure, by far the most ever for a California initiative campaign. 

In 2017, the Association proposed safe harbors for employers to voluntarily provide benefits such as health care coverage without triggering employment status. Since then, several state-level bills have been introduced, including in New York, California, and Connecticut, several of which would have provided sectoral bargaining rights for drivers. New efforts are underway in Massachusetts and Illinois. 

Such efforts have divided the labor movement. At the 11th hour, the president of the International Brotherhood of Teamsters unsuccessfully called for a veto of the bill that the local chapter had spent two years supporting. Labor unions are largely against such measures in the U.S. Notably, because the Washington measure retains drivers’ independent contractor status, it does not confer the ability to form a union under the NLRA. Meanwhile, unions in Canada and the United Kingdom have been able to reach compromises with gig companies that provide benefits without formal bargaining rights. 

Outlook: The Washington measure is a small but significant step toward providing employers the ability to grant independent contractors certain benefits without undermining worker flexibility or triggering requirements and liability that comes with employee status under federal and state laws. It remains to be seen whether such compromises can be arrived at in other states. Meanwhile, the NLRB is considering a new independent contractor standard that would make it easier to prove employment status. HR Policy argued in an amicus brief to the Board that such a move would have negative consequences for both employers and workers.