The U.S. Chamber of Commerce has challenged the Seattle City Ordinance giving drivers of app-based transportation companies that use independent contractors to provide services (such as Uber and Lyft) the right to collectively bargain.  (See our post, Seattle City Council Enacts Ordinance Giving Drivers Right to Collectively Bargain, Legal Challenges Expected.)

On its face, the federal lawsuit seeks to invalidate the Ordinance on the grounds that it violates federal anti-trust law and is preempted by federal labor law.  However, if the Chamber is successful, the lawsuit will have accomplished a much larger goal – the promotion of competition to benefit consumers, the elimination of a major challenge to app-based companies’ business model, and protection of these companies’ ability to operate union-free.

The National Labor Relations Act governs most private sector employees’ rights to bargain collectively. The Chamber argues that the Ordinance is preempted by the NLRA because (1) it attempts to regulate independent contractors who were intentionally excluded from the collective bargaining requirements of the NLRA, and (2) administration of the Ordinance requires the Seattle Director of Finance to determine whether a particular driver is an independent contractor or employee, a determination which is reserved to the exclusive jurisdiction of the NLRB. The Chamber has asked the court to declare the Ordinance unlawful and enjoin its enforcement.

The lawsuit is not expected to diminish the Seattle City Council’s support for the legislation or deter unions from seeking to represent drivers pursuant to the Ordinance. Teamsters Local 117 has publicly denounced the lawsuit as an attempt to derail collective bargaining for independent contractor drivers.  Regardless, given the importance of the issue and the potential economic impact to app-based transportation companies, the litigation is expected to be hard fought.