Selected SLC Research


Policy Analysis | March 9, 2015

Proposed Ridesharing Laws in the States

Sujit CanagaRetna

(Accurate as of February 12, 2015)

Legislation regarding ridesharing services such as Uber, Lyft and Sidecar has proliferated over the past two years (see Transportation Network Company Ride Sharing Issue Status). In some instances, ridesharing companies – particularly the largest company, Uber – have backed legislation to open markets, gain credibility and legal protection, but also that could create barriers to entry for smaller ridesharing companies. Typically, such legislation matches current company policies on background checks for drivers, vehicle inspections, driver training, and insurance requirements.

Uber has opposed (see Uber's System for Screening Drivers Draws Scrutiny) legislation and regulation, however, that increases standards from the company's current practice, as have Lyft and Sidecar. Most legislation, regardless of ridesharing companies' support, centers on regulating driver and passenger safety similar to taxis and livery services. Laws have focused on permitting drivers and vehicles, with some variance between states on permit requirements. While some legislation requires criminal background checks equal to current company policies in place at the ridesharing companies, others would require commercial driver's licenses, or ban those convicted of DUI or sex offenses. Legislation varies also on how and when ridesharing vehicles are insured, and whether the burden of insurance should fall on the ridesharing company or driver (see Sharing a Ride, But Not Insuranceand NAIC Report). Other legislation considers the collection of state sales taxes levied on ride fares.

California was the first state to develop regulations for ridesharing companies. (Also see attachment entitled CA – Property Casualty Owners Press Release). In 2013, the state Public Utilities Commission unanimously approved rules establishing a new class of business – the Transportation Network Company (TNC) – and required these businesses to maintain a license from the Commission, as well as certain safety measures, namely background checks for drivers, vehicle inspections, driver training, and insurance policies with at least $1 million per-incident coverage. The state Department of Insurance held an investigatory hearing and developed the following recommendations:

Require $1 million commercial liability insurance to begin when driver activates the app currently in place by the ride sharing company such as Uber;

Require $1 million uninsured/underinsured coverage to protect driver and passenger;

Require the ride-sharing company to provide the company policy on drivers accessible and in the vehicles;

Require the ride-sharing company to disclose to drivers that personal insurance may not cover the driver;

Require the ride-sharing company to provide comprehensive and collision coverage for the vehicle if the driver has similar personal coverage;

Determine which regulatory authority will have oversight (note: In California, ride-sharing is regulated statewide by the Public Utilities Commission, while taxis are regulated at the municipal level); and

Place burden of insurance coverage on ride-sharing company.

In addition to the Commission's regulation, the governor signed AB 2293 into law on September 17, 2014, which requires ride-sharing certificates demonstrating compliance with state-required vehicle identification and accident liability coverages. As recently as last month, however, there have been conflicts over compliance with the state's law, as Uber suspended drivers who registered vehicles with the commercial permit required by the state DMV and the California Highway Patrol. In order to keep working, some drivers switched to personal registration, despite a DMV memo urging them not to do so. Uber referred to the statute passed in September, which does not address vehicle registration. As a result, the California General Assembly is likely to revisit the issue during its 2015 session.

Given the compliance issues in early-movers like California, as well as the recurrence of legislation in other states, legislation focusing on ridesharing will continue to be a major, developing issue. Recent legislation and regulatory action taken by states, including two states  – South Carolina and Pennsylvania – that provisionally allowed operation of ridesharing services pending legislation, is attached. The legislation in these states fit the same broad themes addressed above, but each varies in scope. In each of the states featured in the following section, the relevant legislation and an article from a newspaper in the state on the topic may be listed.

Colorado

"Lyft, Uber and other ride-sharing companies will have to obtain permits from the Public Utility Commission (PUC) and carry at least $1 million in liability insurance. The companies, or their drivers, will also have to carry primary insurance coverage during the controversial gap period - when a driver is soliciting fares but hasn't been matched with a rider. [Governor] Hickenlooper is urging the PUC to require drivers' vehicles to be inspected by certified mechanics. Drivers, though, will not be required to undergo the same criminal background checks that taxi drivers face, an area of concern for Hickenlooper. Taxi drivers are subject to fingerprint background checks performed by the Federal and Colorado Bureaus of Investigation, while ride-sharing drivers will remain vetted by private companies that use publicly available data.” (source: http://www.denverpost.com/business/ci_25907057/colorado-first-authorize-lyft-and-ubers-ridesharing-services, bill: http://www.legispeak.com/bill/2014/sb14-125 )

Georgia

"Among the new rules under review are stricter background checks and insurance requirements for drivers and collecting sales tax on passenger fares.” (source: http://wabe.org/post/lawmakers-consider-new-regulations-uber-and-lyft, bill: HB 225)

"Legislation introduced in the state House on Wednesday [February 4, 2015] would require all drivers for Uber, Lyft and other ride-sharing programs to pass a state background check.” (source: http://www.myajc.com/news/news/state-regional-govt-politics/bill-requires-state-background-check-for-uber-driv/nj4mf/http://politics.blog.ajc.com/2015/02/09/a-second-effort-to-oust-uber-from-georgia/, bill: House Bill 224)

"Uber and other ridesharing services would be required to maintain $1 million insurance coverage for all drivers from the moment the driver accepts a ride request to the time the ride ends. House Bill 190 calls for a minimum $300,000 coverage for bodily injury or death and $50,000 for property damage whenever a driver is logged into the company's system.”(source: http://politics.blog.ajc.com/2015/02/09/a-second-effort-to-oust-uber-from-georgia/ , bill: HB 190)

Illinois

"Illinois' ridesharing rules - passed in May 2014 - require TNCs [Transportation Network Company] to show a photo of a driver and a fare estimate in the app and deliver an electronic receipt upon completion of the trip.” (source: http://blogs.wsj.com/digits/2015/01/29/uber-laws-a-primer-on-ridesharing-regulations/ )

Indiana

"[B]ill calls for background checks and mandatory insurance. It bars sex offenders, and people who have been convicted of a felony in the past seven years.” (source: http://www.indystar.com/story/news/2015/02/02/lawmakers-aim-regulate-ride-share-services/22775705/ )

Massachusetts

"The new rules  – which require drivers to show proof of insurance and undergo background checks, among other things  – are a first step in a "robust process” that will ultimately yield additional regulations for the popular services, said Cyndi Roy Gonzalez, a spokeswoman for the state Department of Transportation... The rules also clarified that ride-share drivers would need personal car insurance, and limited the definition of a transportation network company vehicle to a ‘personal passenger vehicle.'” (source: http://www.bostonglobe.com/metro/2015/01/03/state-takes-major-step-regulating-ride-share-companies-such-uber-lyft/eQKKXBZaW9km1MlRa09inN/story.html"> )

New Jersey

"Six bills designed to regulate "passenger transportation companies that use an online application" were introduced in the New Jersey Legislature last year [2014]. They differed in details but all aimed to require more extensive background checks, stricter licensing requirements, and oversight by the state's Motor Vehicle Commission (MVC). In December 2014, the Assembly Transportation Committee combined them into a single piece of legislation to require ride-sharing companies secure permits from MVC before doing business here and drivers meet certain requirements...proof of adequate insurance...specify when insurance is valid...minimum liability standards of $250,000 per incident...$10,000 per person...proof of registration...criminal activity history and results of recent drug testing”(source: http://www.nj.com/opinion/index.ssf/2015/02/new_rules_coming_for_ride-sharing.html )

New Mexico

"The legislation would require ride-sharing services to provide insurance and conduct "rigorous background checks" on drivers.” (source: http://www.kob.com/article/stories/s3690350.shtml#.VNU1ifnF8fU)

"Under the proposal, ride-sharing services will be required to provide insurance and conduct rigorous background checks on drivers.” (source: http://www.thestate.com/2015/01/29/3957847_2-new-mexico-lawmakers-eye-regulating.html?rh=1 )

Pennsylvania

"...At its final meeting of 2014, the Public Utility Commission (PUC) board voted 4 to 1 to grant experimental authority for rideshare company Lyft to operate in Allegheny County and statewide. The approval came with conditions and is similar to a license granted last month to rival company Uber...The next step for Lyft and Uber, assuming they meet the Pennsylvania PUC's terms for the experimental licenses, would be a change in state law which would deal more specifically with their business models. What the PUC has granted so far is a permit that covers entities that don't fit into an existing category under its code, which is why the permits are only good for two years.” (source: http://www.post-gazette.com/business/development/2014/12/21/Pennsylvania-utilities-chairman-Powelson-looks-back-on-the-year-of-Lyft-and-Uber/stories/201412210013 )

South Carolina

The Public Service Commission allowed Uber to operate in the state, pending legislation from the General Assembly. (source: http://www.thestate.com/2015/01/29/3958237/uber-allowed-to-continue-to-operate.html )

Virginia

"Senate Bill 1025 has been hashed out over months, with heavy involvement from the Virginia Department of Motor Vehicles.... The bill requires those companies to be accredited by the National Association of Professional Background Screeners or the state police.” (source: http://www.dailypress.com/news/politics/dp-nws-ga-legis-notebook-20150119-story.html, http://www.richmond.com/business/local/article_732bc0b0-388c-5cee-a96b-71c6afaeb499.html )

"The House of Delegates on Friday [January 30, 2015] joined the Senate in passing a bill that would set licensing requirements for such services' drivers...drivers would have to be at least 21 and undergo background checks that examine their criminal history, driving record and sex offender status. The bill also requires that drivers purchase liability insurance with at least $1 million in coverage. The companies would be required to pay an initial licensing fee of $70,000 and then $3,000 every year thereafter...An analysis of the legislation by the Virginia Department of Planning and Budget estimated that it will cost $640,000 to regulate the ride-sharing services during the first year and $440,000 annually after that. But the fees paid by the companies and drivers will cover the costs, the Department said.” (source: http://www.newsleader.com/story/news/2015/02/01/virginia-bill-allowing-uber-lyft-approved/22702597/ )

Washington

"State Senator Cyrus Habib wants stricter insurance regulations and third party background checks for drivers.” (sources: http://www.king5.com/story/news/local/olympia/2015/02/02/uber-lyft--ride-sharing-senator-habib-regulations-rules-olympia/22777879/, http://www.csmonitor.com/Innovation/2015/0203/Washington-state-bill-tries-to-force-Uber-Lyft-to-act-more-like-normal-taxis)

"The proposed legislation, which was taken up by the state Senate's Transportation Committee, would regulate rules for ridesharing companies...The law would ensure a ‘driver's compliance with insurance, qualification, conduct, nondiscrimination, maximum work hours, criminal history, and driving record requirements.... The legislation would require that insurance policies are valid from when the driver is logged on to the system, and not just when the rider is in the vehicle.” (source: http://www.autoworldnews.com/articles/12688/20150203/ridesharing-services-could-soon-be-regulated-in-washington.htm)

West Virginia

"[Senate Bill 385] requires the companies receive a permit for operation from the Division of Motor Vehicles at an annual cost of $5,000. Companies would be required to conduct background checks on all drivers, disclose the driver's pictures and license plate numbers, and have estimated ride costs available to the rider before he or she enters the vehicle.” (sources: http://wvpublic.org/post/could-uber-be-coming-west-virginia, http://www.charlestondailymail.com/article/20150202/DM01/150209812)

"The bill requires transportation network companies to maintain coverage at $50,000 for injuries caused to an individual, $100,000 for an aggregate of all passengers and $25,000 for personal property for the period before a driver connects with a passenger via the app...The Senate bill would place oversight of transportation network companies under the state Division of Motor Vehicles...It should be noted the Senate bill does require transportation network companies to perform background checks on all its drivers. It also requires said companies to obtain a permit from the Division of Motor Vehicles at an annual rate of $5,000.”(source: http://www.charlestondailymail.com/article/20150211/DM01/150219789/1420)