Uber: We're not in Kansas anymore... or Nebraska?

Published by argonavis in the blog argonavis's blog.

A (really) short introduction to ridesharing legislation

As anyone who drives for Uber, Lyft, or similar services is probably aware, these services have been operating in a legal grey area in a lot of cities and states. Since these companies do not consider themselves transportation companies, they have ignored statutes and regulations in regard to the operation of taxi services and limo services. And, in fact, many cities and states have also recognized that ride sharing companies, which they generally term Transportation Network Companies (TNC), are distinct from traditional taxi and limousine services.

The problem is that in addition to creating a legal framework for these services to operate under, many cities and states have introduced additional regulations. These regulations generally fall under the following categories:

  • Background checks

  • Insurance coverage

  • Vehicle requirements

  • Driver requirements

Each city and state has variations on these themes, but a few basic trends have emerged. It appears that most cities and states will eventually pass laws legitimizing ridesharing services and legalizing driving for these services. They will, however, require more stringent background checks of drivers, broader insurance coverage, vehicle safety checks, and specific drug and alcohol policies. Many of these regulations will not have a significant effect, as most companies have many of these policies and procedures in place already. However, the insurance requirements, as well as, record-keeping and compliance, will place a burden on these companies and perhaps significantly increase their operating costs.

Uber, in particular, has a wide-ranging and well-documented lobbying effort to influence the content and implementation of statutes and regulations. In general, Uber is strongly resisting any regulations that require additional insurance coverage and those that would significantly impact their ability to bring on new drivers, such as background checks and vehicle requirements. Uber has often characterized

From the point of view of drivers and passengers, however, most of the changes being implemented would be positive, as long as they don’t result in companies pulling out of markets entirely, as Uber has recently done in Kansas, or significantly increasing rates due to higher operating costs.

We’re not in Kansas anymore…

On Monday, the both the Kansas House and Senate voted to override Governor Sam Brownback’s veto of SB117, which is known as the Kansas Transportation Network Services Act. In response, Uber almost immediately suspended their operations in the state, saying on their blog that the new regulations made it, “impossible to operate,” and lamented the negative impact of the shut-down on drivers and consumers, specifically, the availability of safe rides and the loss of jobs.

The new regulations in Kansas actually do clarify to the grey area in which ridesharing and their drivers have been operating. For example, it states that ride sharing companies,“motor carriers,” nor do drivers need to register their vehicles as, “commercial or for-hire.” This is important for rideshare companies because it exempts them from the requirements for commercial operators and for drivers because in many states drivers are at risk of being ticketed for operating unlicensed commercial or for hire vehicles.

The bill does include some new requirements for ride sharing companies, such as specific guidelines on background checks and insurance coverage. Rather than completing their own third-party background checks, ride sharing companies would be required to complete background checks of new drivers through the Kansas Bureau of Investigation, which would include the fingerprinting of new drivers and an FBI records check. Additionally, they would be required to insure drivers whenever they are logged into the app, not just when they have passengers.

Based on Uber’s lobbying efforts against the bill it appears that their primary objection to this bill is a section on lien holder’s interest, which requires that drivers who have a lien or loan on their vehicles to provide proof to both the lien holder and the ride sharing company that they have comprehensive and collision coverage. Most auto loans currently require this already, however, making Uber’s objections to this requirement a little confusing. Uber maintains that the bill requires insurance, “that is not required in any of the 50 states,” which is at least partially true, but considering that it would required by the loan contract, Uber’s drastic measures in response to this requirement seem perplexing. There is some speculation that Uber planned to pull out of Kansas even before the vote on SB117 took place.

Is Nebraska next?

Given Uber’s response to new regulations in Kansas, it would have seemed likely that a similar scenario is unfolding in Nebraska. Uber, however, supports LB629, which is currently in committee but appears headed for a vote, even though it includes more stringent regulations on ridesharing companies than Kansas.

Similar to Kansas, Nebraska makes the operation of and driving for a ride sharing company legal while also adding additional regulations for companies and drivers. For example, Nebraska will require companies to insure drivers whenever they are logged into the app and includes requirements in regard to background checks. Nebraska, however, will also require yearly vehicle inspections and a driver training program to be completed prior to allowing a driver to work.

Nebraska also outlines specific driving violations that would disqualify a driver. Although it is possible that these violations would already disqualify a driver under current guidelines, I haven’t seen the specific requirements made public by any company. Nebraska would specifically ban any driver who has had four or more, “moving traffic violations,” or one or more “major traffic violations,” in the last 3 years from serving as a driver. Examples of major traffic violations include:

  • Hit and runs

  • Reckless driving

  • Hitting a pedestrian

Additionally, any person convicted of a DUI in the past 7 years would be prohibited from driving for a ride sharing service.

Nebraska’s requirements for drivers who have liens on their vehicles is somewhat different, however. The driver is required to inform their lien holder that they intend to use their vehicle as a ridesharing vehicle and provide documentation to the company of this disclosure. Unlike Kansas, however, Nebraska does not require specific insurance coverage.

One of the more interesting requirements in Nebraska’s legislation is the requirement that the Public Service Commission provide a yearly report to the legislature in regard to the impact of ridesharing services on the taxi industry. Specifically, this report would include information about the numbers of taxi carriers, taxis, and drivers compared to historical numbers. This requirement would appear to be aimed at assessing the impact of ridesharing services on taxi carriers and drivers. It also suggests that at least part of the aim of the legislation is to protect taxi carriers and drivers from competition from ride sharing services.

The legislation also creates Transportation Network Company Regulation Cash Fund. Although the specific purposes and uses of this fund are not described, it would be funded by the collection of a fee from any ridesharing company doing business in the state. Companies would have the option of either paying a flat $25,000 or $80.00 per vehicle operated by their drivers in the state.

A short disclaimer

Please note that I am not a representative of Uber, Lyft, or any other ridesharing service and all opinions expressed in this blog are mine alone. I am not an attorney and none of the information herein should be understood as legal advice. Although I have experience and background in reading and interpreting statutes and regulations, I make no specific claims to the accuracy or reliability of my analysis or reporting. You should consult with an attorney in regards to the specific legal issues regarding driving or operating a ridesharing service.
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