We all need to get around and in this day and age, service providers have created innovative ways to take travelers from point A to B all the way to Z. Organizations such as Uber and Lyft have simplified the process by allowing consumers to book a ride via smartphone. Company drivers use their vehicles and offer a business model that is cheaper and more personal than your traditional taxi service. However, governments and competitors have challenged the legality of these organizations claiming that drivers who are not licensed to operate a taxi are unlawful and unsecured. The new wave of popular “uberfication” has stirred its fair share of controversy forcing regulators to bureaucratize its practice.
On April 15th, San Francisco’s Office of the Treasurer and Tax Collector, Jose Cisneros, announced that Uber and Lyft drivers now require obtaining a business license. The Wall Street Journal released information detailing the city’s recent actions. The office sent out letters to 37,000 identified driving contractors prompting them to retrieve a license within the following 30 days. Business owners that make less than $100,000/year cost drivers $91 to obtain. This new law demonstrates the unconventional method that Uber and Lyft take in establishing drivers as independent contractors rather than salary workers. Unfortunately, it is this exact business approach that has led Uber to a class-action lawsuit claiming that they falsely identify their drivers as independent contractors. In response to San Francisco’s new requirement, one Uber spokesman wrote in an email to SF Gate, “Uber partners with entrepreneurial drivers and as independent contractors, they are responsible for following appropriate local requirements.” Lyft has voiced concerns about this mandate claiming that publicly certifying drivers comprise their right to privacy. In addition, SF officials have declined to comment on their sources for identifying the city’s nearly 40,000 drivers. Nevertheless, the city is not budging and assures critics that there will not be any extra taxes for newly licensed recipients.
Almost a week after San Francisco’s announcement, state officials approved Uber and Lyft to offer carpooling services. UberPool and Lyft Line are alternate transportation options granting consumers an even more affordable ride by splitting the costs among shared passengers. According to an article in the Los Angeles Times, the proposal was passed by the California Public Utilities Commission (PUC) with a 4-1 vote. The push for commercial carpooling was initiated by San Francisco’s Assemblyman Phil Ting challenging a state policy that prohibited its practice. Although legal battles are far from over, both companies consider it a step in the right direction. Other planned regulations such as a required fingerprinting for background checks and establishing the fair use of “personal vehicles” are still in the works. The PUC feels that more discussion is needed to address fully these issues.
Many densely populated regions have a high demand for Uber and Lyft. These new announcements enable both companies to operate more flexibly while requiring drivers to legitimatize their income. With the new license standards, Uber may form a stronger argument that there drivers are not falsely identified as independent contractors. However, the expectation to attain licensing must be adhered to and varies from city to city. With every solution comes possible issues that have to be dealt with one way or another. Government officials on a local and state level are working diligently to establish fair policies for a relatively new industry.
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