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.