This Article analyzes the viability of legislation extending labor rights to workers currently excluded from protection in the on-demand economy. Uber, perhaps the most well-known business operating in the on-demand economy, classifies its drivers as independent contractors, which strips them of federal rights to organize a union. Uber argues that its algorithm-based business model has essentially transformed the employment relationship, suggesting traditional labor laws are no longer necessary. This argument is belied by the economic realities of the workers who make those algorithms possible and profitable. While some prefer working multiple “gigs,” many on-demand workers struggle to piece together full-time hours and minimum wages; they possess neither the individual bargaining power of contractors nor the collective bargaining power of employees. In the absence of federal leadership to correct this imbalance, state and local governments have begun taking steps toward regulating the on-demand economy. The Seattle City Council passed an innovative ordinance in 2015 giving drivers for rideshare companies like Uber and Lyft the right to form unions and collectively negotiate labor contracts. The ordinance was swiftly challenged with a lawsuit by the U.S. Chamber of Commerce, and the viability of such measures to withstand legal challenge remains undetermined. Last year, more than 35,000 Uber drivers in New York City formed a modern-day “guild,” a move that just narrowly preceded the high profile class action settlement—which was later overturned—by Uber drivers in California who challenged their independent contractor designation. As more and more workers are classified as independent contractors, some scholars and labor advocates have suggested replacing traditional employment-based benefits, such as disability insurance, retirement accounts, and paid sick days with a set of “portable benefits.” But none of these patchwork solutions guarantee to on-demand workers the firm establishment of collective bargaining rights—the traditional cornerstone of American labor law. Though the technology fueling the on-demand economy is new, the restructuring of work to evade labor law protections is not. The author’s prior research on the use of outsourcing, subcontracting, and misclassification in the late 1990s established a framework for analyzing when such workers—dependent contractors—should be endowed with the same labor protections as their employee counterparts, and when they should be considered to be truly independent contractors. This analytical approach has found new relevance in the age of Uber and the on-demand economy. This Article analyzes the relationships created within the on-demand economy and provides an in-depth analysis of the federal preemption and antitrust issues raised by collective bargaining laws like Seattle’s in order to determine whether state and local attempts to regulate working conditions in the on-demand economy may survive legal challenge.
Elizabeth J. Kennedy, Employed by an Algorithm: Labor Rights in the On-Demand Economy, 40 SEATTLE U. L. REV. 987 (2017).