State Rideshare Collective Bargaining Policies Hold Great Promise

A promising new strategy to enable rideshare drivers at companies such as Uber and Lyft to unionize and bargain collectively first became law in Massachusetts in November 2024. As worker organizing there continues, the strategy could spread to California as soon as this fall, with drivers also pushing Minnesota and Illinois to consider action.¹

These new and proposed state policies, based on creating an easier path to form a union and bargaining across an entire sector of the economy rather than with an individual employer, represent critical experiments for how to rapidly improve jobs in today’s economy.

Most directly, these state policies will test whether a new type of collective bargaining policy can build power and improve conditions for drivers in the rideshare industry, a particularly challenging sector of the economy in which to raise standards because of its high turnover rate and vulnerable workforce with few legal rights. Raising standards is also complicated by the industry’s dominance by powerful corporations that make heavy use of artificial intelligence (AI) and related technologies to surveil workers and potentially replace them.²

If this model can overcome the challenges in the rideshare industry, it could create a sorely needed path forward for workers in other industries to improve their jobs and push back against the growing influence of corporations and technology. Scalability and the potential to address challenges from new technology make this new model important.

For policy experts, these new state reforms can also help answer critical questions about how best to design reforms to improve jobs and balance economic power. Unions and collective bargaining have a proven record of building power for workers and regularly improving working conditions­—and arguably have done more to raise standards for workers than just about any other potential reform—but this is a new model operating in a particularly challenging industry, and thus tweaks may be needed.³

In short, these state collective bargaining policies are worth understanding and deserve close attention.

The remainder of this report explores the new policy model in detail, its status in the states, and key questions about the model that need to be answered.

The new model is based on two principles: enabling workers to form a union and bargain collectively through an easier process than exists under the National Labor Relations Act (NLRA), the federal law that controls most private sector workers’ unionization efforts, and allowing workers to bargain across an entire industry—often known as sectoral bargaining—rather than just at a single worksite, as the NLRA encourages. These two moves are sorely needed and hold great promise.

Workers need an easier path to form unions and bargain collectively because the NLRA gives corporations too many ways to avoid negotiating and to bust unions—so much so that just 1 in 7 union organizing drives achieve a first contract within a year.⁴ Rideshare drivers in particular need an easier path because they have high turnover,⁵ do not have a traditional worksite, frequently work for multiple companies, and face great difficulty holding lead firms accountable for workplace standards.⁶ They also have an especially hard time identifying and talking to all their fellow rideshare drivers, as the companies have the ability to quickly activate and deactivate drivers and can easily target workers with anti-union messages.⁷

Sectoral bargaining is particularly well suited to rideshare because it covers all drivers in the industry, from full time to casual, no matter how firms try to structure their work. Indeed, as one academic study explained, workers in occupations that are “inherently hard to organize are more likely to be organized in unions” under sectoral bargaining systems.⁸ Sectoral bargaining also raises wages, benefits, and other standards for far more workers than the single worksite default of the NLRA—and does so in a way that enables companies to compete on a level playing field.⁹

States can create a new model for rideshare drivers because of an unfortunate legal situation that rideshare companies have fostered and exploited.¹⁰ Since app owners control many aspects of rideshare drivers’ work, the drivers could rightfully be considered employees rather than independent contractors under the NLRA and other laws such as those that set the minimum wage. But unless and until the Trump administration and the U.S. Supreme Court take unlikely actions to affirm that drivers are employees, states have the legal authority to create labor policy for these workers unconstrained by the NLRA’s preemption of most state actions that affect unions and collective bargaining.¹¹

The core elements of the new model—sectoral bargaining and an easier path to unionization and a contract—have proved successful and are the policies that pro-labor elected officials in other countries are increasingly moving toward. The Australian Labor government created a sectoral “supported bargaining stream” in 2022,¹² and the European Union is currently pushing its member countries to adopt sectoral bargaining models.¹³ The British Labour government plans to enact fair pay agreements containing an easier path to unionization and collective bargaining that covers the entire sector.¹⁴

In the United States, sectoral bargaining¹⁵ in the auto and steel industries¹⁶ in the mid-20th century was critical for building the American middle class into the envy of the world, and it continues today in industries where unions have sufficient power. Somewhat related sectoral standards boards¹⁷ do not involve collective bargaining but have boosted wages in home care in Nevada,¹⁸ in nursing homes in Minnesota,¹⁹ and in fast food in California.²⁰ These sectoral standards boards share some similarities with the new Massachusetts rideshare model, and lessons from these boards will help improve work in today’s economy—though sectoral standards boards are ultimately a governmental process for setting standards involving firms and employees rather than true collective bargaining between workers and companies, as in the new rideshare model.

The state of Massachusetts is in the early stages of implementing the new rideshare model. Fifty-four percent of voters approved the law through a ballot initiative in November 2024, creating a first-of-its-kind law in a U.S. state.²¹ Since the initiative became law, thousands of workers have signed union cards and are seeking to start bargaining²²—even as they fight industry-backed legislation that seeks to delay the process.²³

In California, similar legislation has been approved by the state House of Representatives and is now pending in the state Senate.²⁴ The legislation must make it through additional votes before it can be signed by the governor, but it has a path to becoming law by October.²⁵

Drivers in Minnesota²⁶ and Illinois²⁷ are organizing to pressure legislators to introduce similar bills in their states.

The details of the Massachusetts law are worth understanding with a bit more specificity, as certain elements may need to be refined to achieve the goals of creating a better process for unionization and collective bargaining for rideshare drivers.

Under Massachusetts’ new law,²⁸ the initial process of forming a union is easier than under the NLRA because drivers gain access to the contact information of their fellow workers when they demonstrate 5 percent support from drivers. This is a much lower threshold than the NLRA standard of more than 30 percent.²⁹ Contact information is critical to having discussions with fellow workers, especially in industries with isolated workers and when employers try to prevent discussions about unions. Rideshare drivers in Massachusetts say they have met the 5 percent threshold to gain contact information, but the state machinery to certify they have met the standard has yet to become operational, indicating an area of the policy that needs improvement.³⁰

The Massachusetts law also makes it easier to start the collective bargaining process and to achieve a collective bargaining agreement.³¹ Drivers can begin the bargaining process with firms in the industry by demonstrating the support of 25 percent of workers instead of the 50 percent plus one required by the NLRA. This lower threshold is particularly helpful given the challenges that rideshare drivers face in connecting with each other. Massachusetts also provides for arbitration to ensure workers can actually achieve a contract, whereas under the NLRA, workers can be subject to endlessemployer delays.³²

Support from a majority of drivers is required for contract ratification. Additional drivers can be organized to achieve this majority throughout the bargaining process, during which workers know they can secure a first contract.

Finally, the collective bargaining agreement covers all rideshare drivers in a labor market, no matter the rideshare company.

The Massachusetts secretary of labor then reviews the agreement to ensure it is a good deal for workers and provide additional protection from potential antitrust suits.³³

The bill introduced in California is similar, though with slightly different thresholds for obtaining lists and starting collective bargaining.³⁴

The new bargaining model and the law’s specifics raise key questions—chief among them whether the new policies can improve working conditions and support workers in building powerful unions or whether policy tweaks are necessary to achieve these goals. Language from the Massachusetts law and evidence from related situations may provide partial answers, but a more complete understanding will take time.

Will the new law raise standards?

One of the most basic questions the new model needs to answer is whether it can deliver higher standards for workers.

It seems very likely that the Massachusetts law and similar policies in other states will at least improve upon existing conditions in the industry—even in locations where there are some existing legally mandated minimum standards for rideshare drivers, such as Massachusetts,³⁵ California,³⁶ and Minnesota.³⁷ Though these legal mandates for minimum pay and benefits have raised conditions for rideshare drivers above what they would otherwise be, there is still a critical need for higher standards and additional protections and benefits.

Unfortunately, existing mandates have led to relatively low standards: The UC Berkeley Labor Center found that the majority of rideshare drivers in Boston, Chicago, Los Angeles, San Francisco, and Seattle earned, after expenses, less than the applicable minimum wage over their entire shift.³⁸ Worse, researchers found that after factoring in benefits and additional taxes that independent contractor rideshare drivers must pay, the median driver in California earned just $5.97 per hour without tips and $7.63 per hour with tips. Such low wages likely occur because the mandated standards are not that high given the expenses drivers are responsible for, uncompensated time waiting for a ride offer, and possibly because compliance with the standards may be less than perfect—as is common in other low-wage industries.³⁹

Creating higher standards and ensuring high levels of compliance with these standards should be attainable because workers will not bargain for lower standards and unions and collective bargaining have proved to be among the most effective mechanisms for enforcing workplace standards.⁴⁰

Will it create good jobs?

A much harder—and more important—test is whether the Massachusetts law and similar state policies can significantly improve working conditions and create good jobs.

Rideshare companies have developed an industry in which it is notoriously difficult to create good jobs.⁴¹ Drivers currently struggle with low wages and poor or nonexistent benefits, occupational injuries, and potential violence from passengers.⁴² They also face algorithmic compensation-setting and surveillance and the threat of arbitrary deactivation—and confront great hurdles to get reactivated.⁴³ Furthermore, the rideshare industry is likely to be among the first industries hit by major job losses due to AI and related technologies as autonomous vehicles become increasingly common.⁴⁴

These challenges make the Massachusetts law and similar state policies critical experiments, as they test whether the model can quickly create good jobs and address the technological threats that may disrupt many other industries.

The potential to address these challenges in rideshare and create good jobs rests on the power of collective bargaining. Collective bargaining generally leads to wages and benefits well above what comparable nonunionized workers earn, as well as to rights on the job.⁴⁵ Collective bargaining also provides a regular path for improving standards, meaning that workers can make continuous progress toward quality employment. Furthermore, collective bargaining has a proven record of helping workers manage industry transitions by helping to protect jobs and ensure workers can transition to good jobs in new sectors.⁴⁶

Creating good jobs through the Massachusetts law and similar policies will require that rideshare drivers build strong unions and become sufficiently organized to bring real power to their negotiations with companies. Indeed, this is critical for workers in any industry that adopts this model and leads to the next question these experiments must answer.

Will workers join unions and build powerful organizations?

The Massachusetts law makes it easier for workers to connect with their peers and achieve a first contract, which should help workers join unions. It remains to be seen whether workers will be able to create a strong and powerful enough union to drive high standards in the first contract and continue improving standards in subsequent contracts.

Questions about union strength are especially relevant because the Massachusetts law has a free-rider problem whereby workers can benefit from the union contract without financially supporting the union. A similar issue also occurs in public sector bargaining because of the U.S. Supreme Court’s decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31.⁴⁹

While the free-rider problem could mean that unions struggle for members and power, research generally finds that sectoral bargaining—even when workers are not required to be members or pay for the costs of bargaining—helps support high union membership.⁵⁰ As one academic study found, sectoral bargaining has a “significant, positive and robust impact on union growth.”⁵¹ This is especially true for workers in jobs with high barriers to organizing, such as rideshare.⁵²

Sectoral bargaining can lead to higher union membership in spite of a free-rider problem because it also creates mechanisms that foster union membership. Under sectoral bargaining, employers have less incentive to fight their workers’ efforts to unionize, which can make organizing easier.⁵³ Furthermore, sectoral bargaining provides unions with recruitment opportunities among workers with whom they already have a connection because they are covered by a union contract. In addition, workers continue to have an incentive to unionize so that they have greater voice and power in negotiations.

Even so, the Massachusetts model may need to be tweaked to do more to support union membership. Many sectoral systems around the world include additional policies that more directly encourage union membership and help overcome the free-rider problem, such as by facilitating union access to workers for recruitment purposes; promoting training programs led by unions; and developing Ghent-like systems, where unions help deliver governmental—or government-like—benefits to their members.⁵⁴ These factors are proven to support high union membership.⁵⁵ Similarly, after the U.S. Supreme Court enabled public sector workers to benefit from union contacts without joining or paying fees, a number of states passed policies to allow unionized workers to meet with new hires and educate them on the benefits of union membership at the worksite and online, facilitate efficient communication between unions and workers, and partner with unions to train the next generation of public workers.⁵⁶

Workers and their unions could potentially try to bargain for these types of member recruitment and retention supports, but they may not initially have the power to do so and thus may need policy to facilitate these efforts. The Massachusetts law contains a provision requiring that workers be notified of their rights, and the California proposal contains a more robust version. Time will tell whether additional policy supports are needed to support high union membership.

Massachusetts has begun a great experiment into whether a different type of unionization and collective bargaining process than that offered under the NLRA can dramatically improve the quality of jobs in the rideshare industry, and California, Illinois, and Minnesota may join soon with similar policies. Indeed, the Massachusetts model is increasingly viewed as a potential way to level the playing field between workers and corporations.⁵⁷ However, whether the model is an effective policy still must be proved.

The results of the experiment with the Massachusetts model will matter most immediately for rideshare drivers, but workers in other industries—particularly those in sectors not covered by the NLRA or otherwise resembling rideshare—could also be affected by the lessons learned from this new model of policymaking.