Uber and Lyft have seen a number of attacks challenging the status of their independently contracted drivers in an effort to force both companies to reclassify and/or treat their drivers as employees. A recent example was a local ordinance enacted in Seattle, Washington, allowing drivers working for ride-hailing companies like Uber and Lyft the right to unionize. Specifically, the ordinance, enacted in December 2015, would allow drivers working for the same company to form a nonprofit organization that would collectively bargain for them.

However, on March 3 the U.S. Chamber of Commerce filed suit in Washington federal court challenging the ordinance. In addition to various challenges under state law, the complaint’s primary challenges under federal law rely upon the Sherman Antitrust Act and the National Labor Relations Act.  The complaint asserts that the ordinance violates and is preempted by the Sherman Antitrust Act as it would allow the independently contracted drivers to form an illegal cartel and engage in illegal horizontal fixing of prices. Federal labor law also preempts the city ordinance, according to the complaint, because:

  • Congress expressly left independent contractors unregulated and excluded from the NLRA’s collective-bargaining requirements; and
  • the NLRA preempts state resolution of issues committed to the exclusive jurisdiction of the National Labor Relations Board.

The complaint specifically notes that the “NLRB has not definitely resolved the employee status of drivers who receive ride requests from software applications and, indeed, as to certain drivers, that issue is currently pending before the NLRB.”

The lawsuit presumably references five different NLRB cases where the Board, as part of its investigation of alleged unfair labor practices by Uber, must determine whether Uber’s drivers are employees or independent contractors. As part of its investigation of those cases, the NLRB issued two subpoenas to Uber requiring the production of sworn answers to 107 written interrogatories and 34 requests seeking production of documents “regarding…the threshold issue of whether the drivers at issue are employees under Section 2(3) of the Act.”

Uber has produced some documents responsive to the subpoenas, but, according to the NLRB, Uber “has not provided the majority of the documents and information requested in the Subpoenas. It continues to maintain that the Board is not entitled to the answers and documents it requested in its Subpoenas, and it has limited its scant production of evidence to the two Charging parties that filed charges in Region 20.” As a result, the NLRB filed a lawsuit in a California federal court to enforce the subpoenas. While the federal court will not decide the “threshold issue,” its decision will determine what information the NLRB has to evaluate the independent contractor issue. If the NLRB ultimately determines that Uber’s drivers should be classified as employees and not independent contractors, it will issue a complaint and have a hearing before an administrative law judge to decide that issue.