//  12/31/18  //  In-Depth Analysis

Take Care is pleased to present a series of posts offering thoughts on how Congress might address key issues in antitrust law.

Antitrust law and enforcement has lost its way, and reform is increasingly becoming a hot topic for progressive academics, policy wonks, and lawmakers concerned about the economic impact of consolidated market power. As a labor law scholar, I come at this debate from a different perspective: how antitrust law inhibits worker power. Organized labor plays a vital role in balancing corporate power—but antitrust law has historically inhibited workers’ collective action, starting in the wake of the Sherman Act and continuing today. Under the right circumstances, though, antitrust law can play an important role in protecting workers from employer practices that unfairly depress their bargaining power, such as predatory non-compete agreements, or secret “no poaching” agreements among franchisees. Any progressive antitrust reform effort should have multiple goals.  But one key purpose needs to be empowering workers, whether they want to change jobs or influence their current working conditions through collective action.  

The use of antitrust law as a cudgel against workers—union organizers, as well as striking and boycotting workers—was a defining chapter in the early history of the American labor movement. Antitrust law remained a major impediment for unions even after Congress declared in the Clayton Act that “the labor of a human being is nota commodity or article of commerce.” That language should have liberated labor—but in 1921 the Supreme Court read it narrowly to protect only what the Lochner era Court viewed as “legitimate” union activity, and not strikes and boycotts that targeted companies because they maintained business relationships with struck employers. Ultimately, that changed with the Norris-LaGuardia Act and the National Labor Relations Act, as well as the decisions in Apex Hosiery v. Leader (1940) and US v. Hutcheson (1941). Today, the conventional wisdom is that workers’ collective action is exempt from antitrust scrutiny only if the workers qualify as employees, rather than independent contractors. (A recent spate of anti-union lawsuits argue the labor exemption is even narrower; they claim that the labor exemption covers onlyprivate sector employees, and that public sector collective bargaining therefore violates the Sherman Act.)

Many jurisdictions distinguish between employees and independent contractors by applying a common law test developed to resolve whether an enterprise should be held liable for the tortious actions of its workers. This inquiry was not designed to assess whether workers have individual bargaining power against the entity that employs them—yet courts treat the outcome of that inquiry as dispositive of workers’ right to strike. As a result, precarious workers who are defined as independent contractors face the prospect of antitrust liability when they attempt collective action, including striking in support of better wages or working conditions. But these workers are powerless to negotiate better working conditions individually. They are also excluded from labor and employment protections, including the minimum wage and Title VII.

The modern Supreme Court has enabled and embraced this analysis. In 1990 the Court agreed with the Reagan-Bush era FTC that a group of District of Columbia lawyers who accepted appointments to represent criminal defendants under the DC Criminal Justice Act had violated the Sherman Act when they struck for higher hourly rates. The lawyers received $30 per hour for court time and $20 per hour for out-of-court time; these rates had been set more than a decade earlier, and are equivalent to ~$50 and $75 per hour in 2018. The lawyers’ strike followed failed attempts to lobby the DC government to raise their rates, and the lawyers were barred by statute from negotiating higher individual rates. While we might not think of lawyers as workers who need to rely on collective action in order to improve working conditions, these lawyers did.

For a more recent example, consider Seattle’s collective bargaining framework for ride-hail drivers. The idea behind the law was to cut through the long-running legal controversy over whether Lyft, Uber, or taxi drivers are employees or independent contractors. The law gave drivers classified as independent contractors the ability to unionize and bargain collectively. However, an ongoing lawsuit filed by the Chamber of Commerce argues that Seattle’s law is inconsistent with the Sherman Act. Unfortunately, the FTC voted to authorize an amicus brief in support of the Chamber.

Individual drivers have neither individual bargaining leverage against companies like Uber and Lyft, nor the ability to compete in their own right with other drivers or with Uber and Lyft writ large. As a UK employment tribunal judge found, “the ‘business’ [of Uber drivers] consists of a man with a car seeking to make a living by driving it . . . no driver is in a position to [grow their driving business], unless growing his business simply means spending more hours at the wheel. . . . drivers do not and cannot negotiate with passengers . . . They are offered and accept trips strictly on Uber’s terms.” Or, to get at this idea from another direction, reported accounts of Uber drivers living in their cars, and revelations that Uber manipulates drivers through gamification, undermine the FTC’s apparent conclusion that competition is enhanced when drivers’ working conditions are set unilaterally by the company.

The goals of antitrust reform should include improving workers’ abilities to exert countervailing power against the large entities that dictate their working conditions. At minimum, that reform should make clear that workers can engage in collective action that targets the enterprises that determine their working conditions, even if those enterprises are not technically the workers’ “employers.”

 

 


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