Uber, Lyft, and Regulating the Sharing Economy

The “sharing economy” goes by many names such as the “gig economy,” the “1099 economy,” and the “on-demand economy,” all of which describe the economic system that uses online platforms to connect workers and sellers with clients and consumers, primarily through smartphone applications. Many of the sharing economy companies are also called the “tech disruptors.” They earned this title because they have changed the way that people do business. But in changing the way that people do business, they have also created unique regulatory challenges for governments across the country. The news is rife with stories about when these regulations go wrong. For example, tenants have been evicted from their apartments in many cities for renting their apartments through the “home sharing” company Airbnb. Another example is the standoff between Uber and Lyft against the City of Austin over a law requiring drivers to pass a background check before they can operate in the city, resulting in Uber and Lyft ceasing operations in Austin and costing 10,000 drivers their jobs. In response to these stories, some governments have begun experimenting with innovative solutions to the unique regulatory challenges created by the sharing economy. One solution that stands out is the ordinance adopted by the City of Seattle. Seattle’s ordinance created a system that allows Uber and Lyft drivers to create a union to collectively bargain with their “driver coordinators.” However, it is possible that Seattle’s ordinance itself violates federal antitrust law. The U.S. Chamber of Commerce has already sued on behalf of Uber in federal district court, but the case was dismissed without prejudice for lack of standing. This Note will explore the labor issues presented by the sharing economy before taking a deeper look into the terms and viability of Seattle’s innovative ordinance. Section I of this Note will provide an overview of the sharing economy and labor relations within the sharing economy. Section II will explore some of the ways in which Uber’s worker classification has been challenged throughout the country, focusing primarily on the class action lawsuit Uber settled in 2016. Section III will discuss the specifics of Seattle’s ordinance and the challenges to the ordinance raised by the U.S. Chamber of Commerce. Finally, Section IV will discuss the state action doctrine as a defense to federal antitrust law before determining whether the ordinance would survive federal antitrust scrutiny under the state action doctrine. Ultimately, this Note will conclude that Seattle’s ordinance, as written, would not survive an antitrust challenge under the state action doctrine