Law allowing Uber, Lyft drivers to unionize upheld in Seattle

Seattle became the first city to allow drivers for ride-hailing companies to unionize when it passed landmark legislation last December. And that right is safe for now, after a judge ruled Tuesday it was too early for any party to challenge it.

A federal judge dismissed a case brought by the U.S. Chamber of Commerce that challenged Seattle's collective bargaining ordinance, the first of its kind in any U.S. city. The judge ruled that because the ordinance had not yet taken effect, it was too early sue. He also said that the Chamber of Commerce didn't have standing to sue, since it wouldn't be directly affected.

The law is set to take effect in September.

The decision allows the legislation to move forward as planned, giving drivers for Uber and Lyft the right to collectively negotiate conditions and pay.

Drivers for Uber and Lyft work part-time and are not officially employees. Keeping drivers off the salary payroll means lower operating costs for Uber and Lyft, a model that has helped them grow rapidly into multi-billion-dollar companies.

That leaves the drivers at a disadvantage against their corporate parent. Drivers in other cities in the United States and around the world have tried similar strategies. In New York, Uber agreed to recognize an "association" for drivers that stopped short of a full union.

Uber and Lyft both opposed the Seattle ordinance.

“We continue to share concerns raised by the U.S. Chamber of Commerce that the ordinance threatens the privacy of drivers, conflicts with longstanding federal labor and antitrust law, and would undermine the flexibility that makes Lyft so attractive both to drivers and passengers," Lyft spokesman Adrian Durbin said.

Uber referred all request for comment to the U.S. Chamber of Commerce. But Uber recently released a fact sheet for Seattle drivers where it framed the ordinance as something that could hurt drivers who do not want to unionize.

"The union would have the exclusive right to speak and act for you; you lose your voice and choice in how to run your business," Uber wrote.

The Seattle ordinance could be challenged in court again once the law takes effect, as Uber and the Chamber want to emphasize.

"While the judge held that it is too early to decide this case, he made clear at oral argument that he stands ready to hear a challenge to Seattle’s unprecedented ordinance in the future," Blair Holmes, a U.S. Chamber spokeswoman, said in a statement. "The city has merely delayed coming to grips with the legal flaws at the heart of this ordinance at great cost and uncertainty to the taxpayers of Seattle.  We urge the city to reevaluate whether it should defend this law in court."

Efforts like the one in Seattle are part of a growing effort to push back against what is becoming known as the "gig economy" -- in which workers in a variety of industries are given short-term jobs through technology platforms.

In addition to Uber and Lyft in ridehailing, there are companies like Handy for home cleaning and Postmates for package delivery, which also use a similar strategy.

One survey by found that almost half of all Americans had either used or supplied labor from the gig economy.