Independent Contractor Unionization Measures Threaten Small Employers

Date: March 16, 2016 Last Edit: April 07, 2016

Seattle Ordinance, Proposed California Law Would Enable Independent Contractors To Unionize

As debate continues over how to classify workers in the so-called “gig economy,” small businesses face threats from legislation that may enable unionization of independent contractors. In December, the city of Seattle passed an ordinance that enables independent contract drivers to unionize. As the Staffing Industry Analysts reports, the US Chamber of Commerce has filed suit against the city for the ordinance, arguing that “absent judicial intervention, the city of Seattle and thousands of other municipalities would be free to adopt their own disparate regulatory regimes, which would Balkanize the market for independent-contractor services and inhibit the free flow of commerce among private service providers around the nation.” In an editorial the Wall Street Journal criticizes the ordinance for the negative implications it would have on the city’s economy by harming small businesses. The Journal warns that the Seattle ordinance opens up the possibility of independent contractors banding together to engage in price-fixing, which would lead to an anti-competitive environment for business and higher costs for consumers.

Meanwhile, small businesses face a similar struggle in California, where the Silicon Beat (CA) reports California Assemblywoman Lorena Gonzales just introduced legislation that promotes “a mechanism to allow some 1099 workers to organize” in a way that would enable them to gain some of the benefits of full-time employees such as a minimum wage, retirement, health coverage, standardized working conditions, and workers’ comp. The AP reports Gonzalez’s proposed legislation “would make California the first state to allow Uber drivers and all other independent contractors to unionize.”

What This Means For Small Businesses

Current events in Seattle and California are troubling for small business owners, who would have a difficult time absorbing the costs associated with laws mandating additional wages or benefits for independent contractors.

Additional Reading

The San Diego Union-Tribune and the Recorder (CA) also report on the California proposal.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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