Senate Bill on regulating Uber, Lyft, etc.

A working group led by the Senate Ways and Means Committee has spent weeks carefully vetting the options for regulating of Uber, Lyft and other “transportation network companies”. I played an active role in the process and fully support the bill that came out of the process. I believe that it will protect public safety without creating barriers to the expansion of TNCs.

I’ll summarize the main features of the bill — which I am all fine with — and one small area on which I’d appreciate feedback — a proposed requirement that companies allow tipping.

The bill does affirmatively regulate TNCs, creating a new division in the Department of Public Utilities. However, the new division will not directly regulate or register drivers or vehicles. Instead, it will require each TNC to seek a single statewide operating license, subject to annual renewal. The TNCs will have to demonstrate to the satisfaction of the division that they have adequate procedures in place to vet and insure drivers.

The bill recognizes that modern vetting techniques that consult many data sources and triangulate to produce a complete personal history are superior to old-fashioned fingerprint checks based on a single database. TNCs must show that they are using sophisticated vetting approaches and the DPU is required to annually audit them. The bill does put in place basic driver standards — must be over 21, must not have had a major criminal offense in the past 7 years, must not have too many traffic violations, may not be a registered sex offender.

The bill requires that TNCs make sure that their drivers are fully covered by insurance. TNC drivers use their own vehicles, so, of course, the vehicle must be insured for personal or livery use under existing law. But, in addition, the bill requires that TNC drivers have a policy that covers the period when they have the “app” on, but are not actually going to a call or carrying a rider. The TNC will have the option of either providing that insurance on an umbrella basis or requiring that drivers prove that their personal policy will cover that situation at the $100,000 level. Once the driver actually has connected with a rider and is traveling to a pick up point or is carrying the rider, then the TNC is required to maintain a policy providing up to $1 million per occurrence.

It is worth noting in passing that under these rules, TNC drivers will be carrying much more insurance than taxis do. Taxis are typically insured at the current minimum commercial level — $40,000 — and are typically owned by corporate shells that insulate their ultimate owners from any greater liability.

The bill includes no limitations on the operating area of TNCs — under the Senate approach, TNCs will remain free to serve Logan and the Convention Center. The bill includes no bail out for taxi medallion holders. Some have suggested that because Boston medallions were sold roughly fifteen years ago to help support the Convention Center construction, the state has some obligation to medallion holders. In truth, those medallions were priced based on expectations of earning potential. For most of the last 15 years, the earning potential of those medallions has exceeded expectations — values soared from $200,000 to $700,000, reflecting strong earnings. Even if these medallions ultimately plunge to zero (which they have not and will not — they are still above $200,000 in the market place), original purchasers will still have made good money. The most passionate advocates for bailout are specialized lenders who made bad loans.

The bill does give cities and towns a ten-cent-per-ride revenue stream from which they can make whatever investments they need to support transportation and it does not prevent them from using that very modest fund to give medallion holders some help if they so wish.

Just one small feature I’m a little queasy about. The bill requires TNCs to build a tipping feature into their app and allow drivers to accept tips. As a former restaurant worker, I personally tip generously in restaurants and barber shops. But the real consequence of allowing tips is that drivers will get paid less per ride by the TNCs, just as restaurant workers get low hourly wages. The market for drivers is competitive. If drivers want to work for a company that builds tipping into its system, they can do so (Lyft does allow tips). If drivers feel they can make more money with less interpersonal hassle at a company that doesn’t encourage tips, they should be able to do that.

Based on the dialog we’ve already had on this website and on the vetting I’ve been part of, I’m fully committed to the rest of the bill, but would welcome your input on the tipping issue.

Update on June 29

The Senate did debate and pass the legislation today. Based on the input received here, I did offer an amendment striking the tipping language. It was adopted. Your comments here make a difference — it was helpful for me to be able to talk about the strong majority view among my constituents that the tipping decision should be left to the businesses, not legislated.

The other significant change in the bill was to require the oversight division to do some kind of backup background checking in addition to the background checking by the company. I didn’t support that, but it is not too big a deal, as long as drivers can start driving after the initial check is done by the company. The bill now will go to a House-Senate conference committee.

Published by Will Brownsberger

Will Brownsberger is State Senator from the Second Suffolk and Middlesex District.

147 replies on “Senate Bill on regulating Uber, Lyft, etc.”

  1. Drivers already make good money and a big plus about Lyft and Uber is that you DONT HAVE TO TIP! There are already plenty of drivers so that isn’t an issue.

  2. Requiring tipping capabilities should not be a prerequisite. The rest of the conditions are based on public safety and clearly are places for legislation.
    As you state, there’s companies that will allow this and some that won’t, that’s part of the free-market.Let the market decide this one.

  3. I agree with you on the tipping issue. I don’t like that American wait staff are be taken advantage of in regards to hourly wages, just because they can make tips. Lets give them the option of tipping, but not require it.

  4. I do not see any reason for tipping to be part of the bill. Let each company deal with tipping as it wants. As you said — it should be up to the driver and the rider to choose the company it wants if tipping is part of the deal.

  5. From where I am sitting, it seems like a horrible, horrible idea to legislate that the companies are required to allow passengers to tip. It seems like unnecessary government meddling at its worst in the free market, and I say that as a liberal who is completely, entirely happy to have the government meddling in the market when it is beneficial for it to do so.

    What is the problem that this piece of the law is intended to remedy? What is so bad about letting the companies determine their own business models — including deciding whether tipping is allowed — that whoever wrote this clause into the law feels it necessary for the government to step in and say, “Nope, sorry, you can’t do this”?

    There needs to be a compelling interest. If you can convince me that there is a compelling interest, then I will reconsider my position, but having read what you wrote above, I don’t see a single word even attempting to explain what the compelling interest is that justifies requiring the companies to allow tipping.

    Can you explain?

    1. Forget compelling. I’m not even sure I see a rational state interest.

      Does this set a floor under earnings, like a minimum wage, or equalize bargaining power, like collective bargaining rights? No? How about providing transparency, or protecting patrons of a common carrier from risks they cannot evaluate on their own, like lack of insurance or shoddy brakes? Still no?

      Then leave it alone. Obviously some people on Beacon Hill think it’s nice to tip. I’m sure they have lots and lots of ideas about many businesses. We all do. That doesn’t mean we get to bumble aimlessly through the economy telling businesses whose models we don’t even understand, “You oughtta do this.”

      You know, there are lots of problems with the digital serfs economy. But so far, most of the solutions have been poorly thought out and don’t go to the root of the issue. Instead, many of the regulations have just been gimmes to competitors who are afraid of new players. Let’s try to do better here. How about a state law prohibiting companies from forbidding employees or contractors to discuss salaries, wages or payments? That would do a lot more to even out the playing field.

      1. I love this comment and totally agree with what you’ve written.

        I suspect that the origin of this attempt to require the companies to allow tipping is a misguided effort to “even the playing field” between TNCs and taxicabs.

        Forget that.

        The playing field is not even, and there is no way it is going to be even. TNCs are a disruptive technology. The taxi business is going to be disrupted. Live with it.

        You think this is disruptive? Just wait until Google’s fleet of driverless cars is shuttling people from place to place. You ain’t seen nothing yet.

        I see no legitimate reason for the government to interfere with the TNCs’ business model in this way.

  6. Uber and Lyft are remarkable assets to both partygoers who can drink and not have to worry about driving home.
    Seniors who can no longer drive, and us baby boomers who want to go into town for an evening but don’t want to pay high parking fees. It also keeps traffic down
    I have never had a bad experience.
    These people are working hard to make ends meet, or are retired and need the extra cash.
    Every car I have ever entered is immaculate, with friendly warm and wonderful drivers who share their life stories. It is an inspiration to use these services.
    I always tip between $3-5 for a short ride. $10 going to the airport. I get tremendous appreciation and thank you’s for this pleasure something that I never experienced with taxi’s in Boston. Tipping is a nice way to say thank you and giving back for an appreciated worker. ABSOLUTELY TIP

  7. Sounds like there are pros and cons to allowing tipping. I’d say let the market take care of this: drivers who want tips and are willing to take lower wages can drive for Lyft. Drivers who want the higher rate and are willing to give up tips in return can drive for Uber. It doesn’t sound like a legislative solution is needed on this issue.

  8. I quite enjoy riding with Uber and not be expected to tip for the service. One of the great features of the service is that there is no expectations for tipping.

  9. I share your queasiness.

    I fear unintended consequences from a requirement of tipping. Many already tip with cash knowing that the operator will get a flat rate from the company (that protects their profit).

    If tipping is required, companies will reduce the amount paid. The operator will not benefit.

    Best to leave well enough alone.

    1. Ideas like this are the very heart and soul of neoliberalism.

      They’re effective at virtue signaling. Their practical effect is quite different.

      Take Cambridge’s hilarious ban on bags. So, so good for the environment. Except stores still give out bags. The only effect is transfer the cost of the bags from the company directly to the consumer, at the cost of ten cents a pop.

      Same here. Require tipping, and all you’re doing is transferring part of the burden of the driver’s pay from the company directly to the rider.

      But it feels so, so good.

  10. If a customer wants to tip for
    good or exceptional service they can
    use cash and who is to know?
    Bill K

  11. It should not be a requirement that the company allow tipping on their app. Let the market determine what they offer. Don’t regulate it.

  12. Hi Will,
    I’m excited about this bill and like you have no problem with tipping drivers, but his is a tricky one. Most people like to tip. Like you, I’m generous, but there are those who are frankly cheap – possibly making for some disgruntlement and in the end the drivers dependent on tips.
    Thanks for asking for feedback!

  13. Will –

    I strongly agree with you on the tipping — it should not be mandated. This is a business decision, not an issue of protecting the health and safety of the public and the drivers. The bill should focus on the later.

    Howard

  14. There should not be a requirement in the bill that TNCs include a tipping feature. If the company wants to have that feature, fine. This is a reasonably free market and they should be able to make a choice about that. I don’t understand the state’s interest in compelling companies to do so.

    Personally, I’d prefer that drivers (Uber or taxi, and restaurant works and others who rely on tips) be paid a fair wage (i.e., never below the minimum wage for everyone else) and not require tips to make a living. It can be such an awkward encounter and puts the livelihood of these workers in the hands of people with various (and legitimate) attitudes about tipping and what constitutes good service.

    Before this legislation, I didn’t even know Uber drivers could accept tips–I thought the whole point was the price was the price and you just open the door at your destination and get out.

  15. If uber or others take a reasonable cut from the drivers fee — 25? 35? Percent — and the drivers get the rest of the money than I think not tipping is fine. I like the idea of drivers having a choice as long as they aren’t being taken advantage of

  16. I still use Taxis if I really need go somewhere where the T does not work for me. And I do not have a smartphone nor want one. So perhaps my opinion is irrelevant. But, just to point out, there is no guarantee in future, perhaps near future, more than Lyft & Uber will be in the market. And the marketplace can always decide (i.e. would be drivers) which Company is best for earning. So perhaps in-bedding tips NOW will take away battles of low wages vs tips, or higher wages vs no tips.If all are equal in this category then what should guide the market, BEST SERVICE, will naturally take over. I’d say requiring tips in the Aps is best policy given this.

  17. Hi Will,
    With regards to the tipping feature, I’d say this is not only unnecessary, but actually counter-productive. As you have noted, more tips generally means less base pay. The idea of tipping is itself antiquated, so let the market sort this out and remove any requirements in this regard from the bill.
    Thanks,
    -Dave

  18. Hi Will-

    I don’t think that companies should be required to build a tipping feature. It is a business decision -riders and drivers can choose their preferred model.

    Amanda

  19. Tipping has been part of the Taxi and Limousine industry for as long as I can think. Nothing wrong with allowing tipping. However, it should be up to the driver.

  20. I recommend NO required tipping feature. If the TNC wants to build that feature into its app, that’s fine. If not, that’s also fine. Then the drivers can decide what type of TNC they want to work for.

  21. I don’t like the idea of tips on uber or lyft. One of the best features of these services is the cashless transaction.
    They should provide excellent service not for a tip but for pride and self respect for the job.
    I would not include this item.
    thanks,
    Joel M. Shaw

  22. Isn’t this squarely a private matter between a company and its workers? In what other industry does the government ever require a tipping regime? This seems invasive, and irrelevant to any issue of public importance.

  23. TTipping can be stressful, for all but espcially for women. I personally find iit a relief to avoid the tip calculation aand the want is a “good tip” vs a “bad ttip” kenundrum. The feedback loop ensures good service so very happy to kkeep tips out of the legislatI’ve process (should we be governing this at all??).

  24. It is my opinion that a company should NOT be required to build a tipping feature into their app/platform/business plan. If a TNC wants to accept tips as a part of their platform, that is all well & good. But it should not be a requirement.

  25. Hi Will,

    I’m against the tipping requirement. I think the market will sort out the best way of compensating drivers. Most drivers I talk to drive for both uber and lyft and say that their compensation is about the same on both of them. I think it adds unnecessary variability to the driver’s pay for an evening. If a driver happens to pick up a couple bad customers for a night, he/she could end up making substantially less. I think giving the drivers the choice of whether they want to use the tipping system (lyft) or a non-tipping system (uber) is the best choice.

    I also don’t see what there is to be gained by requiring tipping. Is the concern that without tips, drivers won’t give the best service? that seems silly because a few bad ratings and they’ll get fired. if the concern is that drivers aren’t paid enough, I don’t think that adding tipping will change driver income since the incomes are the same between the two current tipping and non-tipping systems

  26. Why is everyone afraid of fingerprints. It should be one part of the vetting process. It’s simple and can be challenged if someone feels it is wrong.

    As to tipping, why not let the companies and the drivers work that out!

    1. The negative with fingerprints is that it means potential drivers have to go to some official place and get printed, and then wait for the government bureaucracy to process the prints. We don’t really have the physical capacity to do that on a quick turnaround basis. It would create a barrier to entry for part-time drivers.

  27. If there is a general social/governmental interest here, it is not in requiring that companies providing such services Permit tipping, but in Prohibiting them from creating an expectation of tipping by building a tipping function into their app. Fifty years ago, when modern values held sway, this would have been obvious, a matter of course. That this perspective has not been suggested in the many previous comments, which are, overwhelmingly, emphatic assertions of neoliberal ideology, is a striking indication that the modern conception of the dignity of labor is now foreign to our thinking.

  28. I have used Uber and happy that I do not have to open my wallet/purse for safety purposes, etc. The beauty originally about Uber was that the fair was substantially cheaper. I prefer no tipping otherwise what would be the difference with taxi tipping.

  29. I think tipping will be a problem, the idea uber was build on is that you get in and out of the car without to have to pay anything and to be much less costly than the expensive taxis with all their hidden fees including tipping, and to include the tip on the credit will likely result that most of the people wit just too tip nothing since they already left the car. I think the system now is fine, having more regulation will just bring us back.

  30. No tipping is not ne of the better features of Uber. If this policy is stopped I will not use Uber.

  31. As a consumer I much prefer the less hassle, all included or service compris approach found in countries from Europe to Asia rather than the tipping expectation/obligation in the US and UK. You can always add a bit more in cash for exceptional service. And since drivers are 21 or over with cars, they should be reasonably compensated without having to rely on the very variable behavior of different customers.

    1. For Uber, specifically, they have implemented a 6th star program, where a rider can provide all the glory towards a driver who went over and beyond for a $500 cash prize!

  32. My main concern with the bill is that this annual fee will be a massive amount which will lead to exactly what got us into this issue with cabs in the first place. A small group of people or companies controlling the entire market and not allowing any competition to enter. This is what drove people out of cabs and into uber and cannot be allowed to happen again. It lets those in control set whatever price or standard they want for services as no one can compete with them. in regards to tipping i agree with you in that i do not think it should be included as the companies will pay workers less instead of working how it is intended. People can always give cash tips as they do now if they want.

    1. The only fee specified in the bill is 10 cents per ride. There is an additional unspecified fee to fund the operations of the DPU oversight division, but since that division is not processing individual drivers or vehicles, it will remain a small bureaucracy. It will also be at the pennies per ride level.

  33. I agree with this:

    If drivers feel they can make more money with less interpersonal hassle at a company that doesn’t allow tips, they should be able to do that.

  34. Senator, once again, we thank you for you commitment to serving the Commonwealth. I wish we could be helpful on this question. Like yourself, we tip generously at restaurants. However, there are restaurants that are sharing the server’s tips with the cooks. Another matter is just how much does a server get, all of my tip or does the server share with other servers. That is not then a real tip as we used to know it.

    David & Teni Patterson

  35. I strongly recommend that tipping is permitted for TNC drivers. As a driver myself I provide my riders with chargers for there cell phones they truly appreciate that service I also provide water and gum. They can plug their phones into my speaker system and listen to their own music. This is aa big deal for many of the younger riders. Tipping is a way for the rider to show their appreciation. With the cost of gas up to $2.45 a gallon and the cost of up keep tips help to defray the cost. If the companies reduce the fares then they will lose drivers. Riders are important but with no drivers there is no business. The companies need to continue to hire more independent drivers to satisfy the riders. One night think that there are plenty of drivers in Boston. That may be true but the surrounding areas are under served. You and I have met and you are a visionary, this business is the difference of my living on a small social security check and having to rely on other services just to get by of being to pay for an apartment with no assistance, buy healthy food and rely on charity and food that is not suited for someone with sugar and weight issues. Tips are at the discretion of the rider there is much incentive for drivers to perform above and beyond. Why do you think the riders prefer the TNC s over taxi’s that overcharge, refuse to take credit cards and try getting out of a cab without tipping the driver.

    1. If you want passengers to be able to tip you, then drive for a TNC that allows that. There are some that do and some that don’t, so market forces are already handling this issue just fine, so there is no need for the government to involve itself. Since there is no need, it shouldn’t; it’s just that simple.

  36. I understand your qualms about forcing tips on the TNCs and I believe that you are correct. I think that forcing tips is not in the drivers best interests, and that the TNCs will advantage of them more than they already are.

    I urge you to oppose the forcing of tips into the apps and explain your reasoning to your fellow Senators.

  37. Hi Will,

    I am very much in favor of TNCs being able to be part of the Massachusetts marketplace. As a rider for my over 15-year career, I became disenchanted with taxis years ago as I waited in long lines to be picked up at Logan or at my home, waiting for a taxi company to answer my call. Uber arrived and I feel like I am finally in a civilized world where the drivers and their vehicles are pleasant and the entire experience is based upon the TNC doing its best – instead of feeling like a burden. Hurray!

    You asked for feedback on the tips: I agree wholeheartedly with you. Like you, I have (many years ago) worked for tips. When I call a driver to bring me from point A to point B, and I am allowed to offer a tip (like in a taxi), that amount is driven by my fee for the trip, which is driven by demand at that time, which I think would be unreasonable and unfair to correlate to a driver’s performance. In addition to the points you made, I think safety would be a big issue. If savvy riders know that the tips are flowing through the app, they would generously pay cash for tips to help the driver avoid tax implications; this increases the amount of cash on hand and makes Uber drivers sitting ducks for robberies.

    Finally, YAY for a town tax that can be generated for TNCs operating in our towns. While I am all for less taxation, I do know that one wealthy, but hesitant to pull out their wallet town, doesn’t like the idea of the sharing economy in its backyard. This will help my town in overcoming the hurdle of opposition to this new, nicer way to live in an urban community that strives for suburbia.

    Thank you for your work on this!

    Best,

    Erin

  38. I agree — tipping should be up to the company, and should not be mandated as a matter of public policy.

  39. Will,

    I use Lyft occasionally, but have never used Uber. I personally like to tip, and many of the Lyft drivers work for both companies and seem to prefer the tip option in my discussions with them. We tip conventional taxi drivers, of course. Short of having an economy where all service workers get something resembling a living wage, I would prefer to tip. I tip when I travel abroad, though at much lover levels. I have always thought the waiter, taxi driver, water ferry driver, what have you enjoyed the validation of knowing they did a good job.

    Mike COllins

  40. Tipping makes no sense to me if it is the standard and then leads to lower wages. I do not support its inclusion in the bill. The current system for payment with or without tips at the discretion of the company works perfectly well.

  41. It makes no sense to me that government should be involved in whether or not a private business allows/promotes/encourages/forbids tipping. Let the company, drivers, and customers figure this out.

  42. We now use Lyft, having switched from Uber. One of the reasons for the switch is that Lyft allows us to add a tip for the driver. We set the tip amount and rate the driver in response to a cell phone text from Lyft and the tip is added before the card is charged. No money changes hands in the car and we increase the tip percentage for a good experience or a short ride. With Uber this was not a choice and we assumed that the driver automatically received a tip but learned that this wasn’t so. When we do take an Uber we now hand the driver a tip in cash, but it seems that Uber is trying to make their fares seem more competitive at the expense of the drivers.

    Almost all the Lyft drivers are also Uber drivers but always look for Lyft customers first. I don’t know if/how Lyft penalizes the drivers with their tipping option but we have never heard complaints from them. But Lyft still seems a better deal than Uber and the drivers prefer it as well. I would prefer that Uber switch to the Lyft method. By the way, Flywheel also includes a tip for the driver. (Flywheel is a commercial taxi-based service and does not have surge pricing.) The bottom line is that if the tipping policy is transparent, I make the choice myself so I hesitate to say this should be required by law.

  43. Requiring tipping specifically in this industry seems rather arbitrary. What exactly is the state/public interest in requiring tips specifically for TNCs? There’s no law on the books that require any other type of employer to allow tipping. In fact, the SJC ruled last year that current tipping laws don’t prevent employers from instituting no-tipping policies.

    The question for me is two-fold. 1) What is the public interest in requiring tips be allowed, and 2) why specifically TNCs as opposed to any other service industry? It seems rather unfair to single out this industry in particular. If tipping laws are to be re-considered, it should be looked at more broadly and not specifically targeted at one industry.

  44. I agree with your position on the bill as a whole, and your implied position re tipping. The TNCs will almost surely, in effect, evolve the structure of driver compensation so that they secure most of the tip revenue. Moreover, since drivers rate passengers, many passengers are likely to feel that the tips are mandatory. Given the uncertainties,and the fact that drivers can opt for Lyft or a taxi company if they wish, government should probably avoid mandating anything.

  45. Allowing tipping is a slippery slope. It opens the door to exploitation by the company via lower pay rates and possibly extortion by drivers.

  46. I think they already “allow” tips; it’s not prohibited. I don’t like it. It implies that such workers can’t be trusted to do a decent job unless their money is withheld and doled out on the spot to motivate them. And I agree with you — tipping as a part of the fare will only drive down base pay. I’d like to stop restaurant tipping! Pay them prevailing/living wages, and reflect that in the menu price, and that’s that. I think that’s how it works in Europe.

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