Seattle gives the needle to Uber and Lyft
Uber and Lyft are like good friends and black sheep family members, just because we are not talking about them directly, doesn’t mean we are not thinking about them.
Their business model is one where you call a ride from an app on your phone. The app matches you with one of their drivers and they pick you up/drop you off and you settle with credit card on file. Most people like the service where they consider them better looking and presented that the traditional taxi companies which was overdue for competitive overhaul.
However, the devil is in the detail and much of this comes down to the laws of how they do business. Each country, state, city jealously protects the terms and conditions on doing business. If you look at a map, how Uber and Lyft operates there is piecemeal. Some have welcomed them with open arms, some have banned them outright.
A major issue is one of Licencing: Traditionally in the US, cities have strictly controlled the capacity of the taxi industry with the ‘medallion’ system. Only taxis with the medallions are allowed to operate. After forking out large sums of money for such tokens, the taxi barons are not happy with the upstarts threatening their monopoly. The taxi system regulated the fares within their jurisdiction but also who could be a taxi driver. Most require an in depth criminal background check that may go above what Uber/Lyft are prepared to carry out on the ground that this is costly.
The business model assumes the drivers are ‘independent contractors’ and this is of importance as there is class-action lawsuit filed by a number of its drivers in California. They contend that they’ve been wrongly classified as contractors, instead of full employees, and that Uber has withheld some of their tips. [see Atlantic for more details]. Up to 160,000 drivers from 2009, could join this in California. A similar class action case is going on in Oregon.
So what does Uber, the company who railed against monopolistic practices do? It updated their driver agreement so that drivers must sign before being able to accept any new rides to require private arbitrators. Except that they tried something like this in 2014 where the updated driver agreement included an arbitration clause that stripped drivers of their right to sue the company in regular court. A federal judge in San Francisco recently threw out that agreement.
Another interesting development was in Seattle: the city council voted to allow the drivers to organize a Union. From NPR:
Seattle on Monday became the first U.S. city to vote to allow Uber and Lyft drivers to unionize and negotiate issues such as pay and working conditions.
The National Labor Relations Act regulates the right to unionize, but it doesn’t guarantee that right for independent contractors like the Uber and Lyft drivers.
The Seattle measure directs companies like Uber and Lyft “that hire or contract with drivers of taxis, for-hire transportation companies and app-based ride-hailing services to bargain with their drivers, if a majority show they want to be represented,” the Associated Press reports.
It passed the City Council 8-0.
So what does the brave Mayor do? He bravely decides to do nothing.
Mayor Ed Murray says he will not sign the bill because of the potential cost to the city, but he won’t veto it so the measure will become law without his signature.
And what is Uber’s reaction. They don’t like it one bit.
“Uber is opposed to Seattle enacting O’Brien’s ordinance and has ramped up its engagement in the city in advance of the council’s vote. David Plouffe, a former political strategist for President Obama now serving as Uber’s chief adviser, visited Seattle earlier this month to promote the company and criticize the ordinance.”
Ah we wondered before what Mr Plouffe would be doing. Being a good Democrat and fighting for the workers rights and social justice or being a good government insider fighting to influence the laws against the proletariat. Guess which path he seems to have chosen.
Pesky things those laws. Funny thing you can be all for changing them one day but the next week, you are the ones being changed.