A judge in Washington State has rejected Uber’s attempt to overturn a Seattle ordinance that gives its drivers the right to unionize, potentially opening the door for higher rates and labor costs. According to the Wall Street Journal, the Teamsters labor union intends to begin working to organize drivers soon.
The legal battle over the rule, which originally passed in December of 2015, has been lengthy. Last August, a federal judge dismissed a lawsuit by the U.S. Chamber of Commerce business group seeking the rule’s suspension.
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Uber has extensively lobbied its own drivers to oppose unionization. The company says the rule could impinge on drivers’ flexibility, and has previously protested a provision that would give voting rights on the unionization question only to drivers who make at least 52 trips in a three-month period. Those higher-volume drivers are presumed to be more likely to support unionization.
Observers have long argued that Uber’s business model depends on very low pay for drivers. A British government report last year found that Uber drivers often took home substantially less than that country’s hourly living wage. Elsewhere, Uber has battled lawsuits over its classification of drivers as contractors rather than employees.
Even under such conditions, Uber has repeatedly posted huge operating losses. Drivers pushing for higher fares or pay rates, then, are a major threat to the company's viability.
Uber has not said whether it will appeal the new decision, but according to the Journal, the rule still faces further challenges from the U.S. Chamber of Commerce and a group of anti-union drivers.
Uber has previously been extremely hard-nosed in dealing with cities whose ordinances threaten to burden its operations, seeming to fear that such regulation could spread. Both Uber and competitor Lyft stopped operating in Austin, Texas after a rule demanding background checks on drivers went into effect there, and have since stuck to their guns. That raises the possibility that, if things don’t eventually go Uber’s way, the same thing could happen in Seattle.