Illinois’ new rideshare union law could hurt drivers, passengers

Bringing rideshare drivers into a union could reduce employment for drivers and will likely raise prices.

Illinois last month became only the third state to allow rideshare drivers to unionize, a move that could hurt drivers and passengers.

The law, which took effect immediately when Gov. J.B. Pritzker signed it Aug. 7, authorizes the creation of a “sectoral” union representing virtually all drivers for platforms such as Uber and Lyft. That union will collectively bargain for a compensation and benefits package for all rideshare drivers, “regardless of the anti-competitive consequences.”

The law is likely to cause higher prices for consumers and could limit employment opportunities for the very drivers it’s meant to protect.

Also, sectoral bargaining means drivers in Chicago and Peoria will work under the same contract regardless of their varying needs and reasons for the work.

What is the process for unionization?

• The Illinois Labor Relations Board determines a list of “active drivers” based on driving data submitted by Uber and Lyft.
• Union organizers must obtain support from 10% of active drivers to start the petition drive for certification. Final certification requires support from 30% of active drivers. The law provides for an election if more than one union wants to represent drivers.
• The certified union could then collect dues from members. Drivers would not be required to be in the union.

What is the bargaining and contract approval process?

• The union would begin the bargaining process with Uber and Lyft.
• A negotiated deal requires approval from a majority of all drivers who completed a minimum of 100 trips in the previous quarter regardless of union membership status, and from the Illinois Department of Labor.
• If a deal isn’t reached after 210 days and a mediation process facilitated by the Illinois Labor Relations Board, negotiations enter into binding arbitration on the matters in dispute, and the resulting agreement will not need to be ratified by drivers.

How does the Illinois law compare to the ones in California and Massachusetts?

Illinois’ law goes the furthest in directly supporting organized labor.

• 90 days after the law took effect, Uber and Lyft must pay the state a 4-cent fee per ride to cover the administrative costs of implementing the law.
• Thirty days after the union is certified, rideshare platforms must pay an additional 16 cents per ride directly to the union to fund the representation of its members. Both fees will be adjusted for inflation beginning in 2028.

What is the potential impact on drivers?

While the law might increase compensation and benefits for some drivers, it also might result in less overall employment and fewer opportunities for work.

Depending on how the compensation agreement is structured, Uber and Lyft could be incentivized to either reduce the number of drivers on their apps or limit the number of hours individual drivers can work.

For example, a contract that provides substantial benefits to each driver could significantly raise the fixed cost per driver for the companies. That could result in the platforms decreasing the number of drivers if they can still generate the same amount of revenue.

What is the potential impact on passengers?

Passengers could face longer wait times and more expensive rides.

Are there any other possible consequences?

The law could lead to job losses for rideshare drivers if they become more expensive to the companies than emerging self-driving technologies.

Companies such as Waymo are already replacing human drivers with autonomous vehicles. In February, Waymo started the process of mapping out the city of Chicago for its fleet of driverless vehicles and announced that “we look forward to serving the city in the future.”

While autonomous vehicles haven’t rolled out in Illinois yet, Waymo will be ready if lawmakers approve legislation to allow them to operate.

This law could remind policymakers to look at all the potential effects of a law rather than just seeking the short-term political benefits of appearing pro-union.