The US District Court for the Western District of Washington [official website] has issued a preliminary injunction [text, PDF] to block Seattle’s first-in-the-nation law that will allow drivers for taxis, Lyft and Uber [official websites] to unionize. The law, passed in 2015, allows drivers who are considered independent contractors to unionize and collectively bargain for benefits such as healthcare. The law was challenged by two separate suits, one brought by a small group of drivers from each company, the other by the US Chamber of Commerce [official website]. The Chamber of Commerce asserts [Seattle Times report] that under federal law, the National Labor Relations Act (NLRA), contractors are not permitted to unionize. Excluding from unionization under the NLRA are public-sector workers, agriculture workers, domestic workers, supervisors and independent contractors. The first three are permitted to unionize under various state laws. City attorneys argue that independent contractors are more akin to the first three than supervisors and the city has the authority to permit them to unionize. The Chamber contends that while drivers have been permitted to set uniform rates to deter under-charing, they have never been able to collectively bargain. Should the city law be upheld, the business models for Lyft and Uber would “likely be disrupted in fundamental and irreparable ways.” The presiding judge stressed that the “Order should not be read as a harbinger of what the ultimate decision in this case will be” when all motions have been fully considered.

With the rapid growth of companies like Lyft and Uber, ride-sharing services have been among the most controversial business models [JURIST backgrounder] in recent history. In March a judge for the US District Court for the Northern District of California [official website] approved a $27 million settlement [JURIST report] in a class action lawsuit between Lyft and its drivers. The suit challenged Lyft’s characterization of the drivers as independent contractors. In December the European wing of Uber was indicted [JURIST report] in Denmark on charges of assisting drivers in their violation of taxi laws, although Copenhagen prosecutor Vibeke Thorkil-Jensen stated that this is just a test case seeking judicial assessment of Uber’s involvement in the illegal acts of two of its drivers. Last April Uber settled a lawsuit [JURIST report] brought by 385,000 drivers in California and Massachusetts regarding their status as independent contractors. In several states, ride-sharing companies have met significant legal opposition, frequently led by competitors such as the taxi industry. Other unresolved questions [JURIST backgrounder] surrounding this new business model continue to prompt debate among lawmakers.