Amended in Assembly March 16, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 24

Introduced by Assembly Member Nazarian

December 1, 2014

An act begin insert to amend Section 5374 of, and to add Section 5444 to, the Public Utilities Code, and to amend Section 1808.1 of the Vehicle Code, end insert relating to transportation.

LEGISLATIVE COUNSEL’S DIGEST

AB 24, as amended, Nazarian. Transportation network companies: public begin delete safety. end delete begin insert safety requirements. end insert

The Passenger Charter-party Carriers’ Act, with certain exceptions, prohibits a charter-party carrier of passengers from engaging in transportation services subject to regulation by the Public Utilities Commission without obtaining a specified certificate or permit, as appropriate, from the commission, and imposes various other requirements. A violation of the act is generally a misdemeanor. begin delete Pursuant to existing law, the commission has adopted rules and regulations relating to the operation of transportation network companies. end delete Existing law defines a transportation network company as an organization, whether a corporation, partnership, sole proprietor, or other form, operating in California that provides prearranged transportation services for compensation using an online-enabled platform to connect passengers with drivers using their personal vehicles.

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Existing regulations of the commission require, among other things, a transportation network company to (1) obtain an operating permit from the commission, (2) conduct a criminal background check of each driver, (3) establish a driver training program, (4) adopt a zero-tolerance policy on drugs and alcohol, (5) maintain specified insurance coverage on the company’s employees, and (6) conduct a 19-point motor vehicle inspection of the vehicles operated by drivers under contract with the company.

end delete begin delete

Existing law, operative on July 1, 2015, imposes specified additional requirements for liability insurance coverage on transportation network companies, as defined, and their participating drivers.

end delete begin delete

This bill would declare the intent of the Legislature to enact legislation that promotes public safety relating to transportation network companies.

end delete begin insert

This bill would prohibit the commission from issuing or renewing a permit or certificate to a charter-party carrier of passengers unless the applicant, in addition to existing requirements, participates in the Department of Motor Vehicles pull-notice system and provides for mandatory Department of Justice background checks of every driver, except as specified, who is either employed by, or under contract to, the applicant. This bill would specifically require a transportation network company to comply with these provisions. The bill would also require a transportation network company to register any vehicle used in the transportation of passengers for compensation with the commission and display the identifying decal issued by the commission on the vehicle.

end insert begin insert

The bill would require a driver of a charter-party carrier of passengers or a transportation network company to submit to the Department of Justice fingerprint images and related information for the purpose of obtaining information as to the existence and content of state convictions and state arrests, as specified, and would require the department to charge a fee sufficient to cover the cost of processing the request described in these provisions.

end insert begin insert

The bill would require that drivers hired or initially retained by either a charter-party carrier of passengers or a transportation network company on or after January 1, 2016, be subject to background checks and mandatory drug and alcohol testing prior to employment or retention and that drivers hired or initially retained before January 1, 2016, complete a background check and drug and alcohol test before January 1, 2017.

end insert begin insert

Because a violation of these provisions would be a crime, the bill would impose a state-mandated local program.

end insert begin insert

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 5374 of the end insert begin insert Public Utilities Code end insert begin insert is
amended to read: end insert

5374.  

(a) (1) Before a permit or certificate is issued or
renewed, the commission shall require the applicant to establish
reasonable fitness and financial responsibility to initiate and
conduct or continue to conduct the proposed or existing
transportation services. The commission shall not issue or renew
a permit or certificate pursuant to this chapter unless the applicant
meets all of the following requirements:

(A) It is financially and organizationally capable of conducting
an operation that complies with the rules and regulations of the
Department of the California Highway Patrol governing highway
safety.

(B) It is committed to observing the hours of service regulations
of state and, where applicable, federal law, for all persons, whether
employees or subcarriers, operating vehicles in transportation for
compensation under the certificate.

(C) It has a preventive maintenance program in effect for its
vehicles used in transportation for compensation that conforms to
regulations of the Department of the California Highway Patrol
in Title 13 of the California Code of Regulations.

(D) It participates in begin delete a program end delete begin insert the pull-notice system pursuant
to Section 1808.1 of the Vehicle Code end insert to regularly check the driving
records of all persons, whether employees or subcarriers, operating
vehicles used in transportation for compensation.

(E) It has a safety education and training program in effect for
all employees or subcarriers operating vehicles used in
transportation for compensation.

(F) It will maintain its vehicles used in transportation for
compensation in a safe operating condition and in compliance with
the Vehicle Code and with regulations contained in Title 13 of the
California Code of Regulations relative to motor vehicle safety.

(G) It has filed with the commission the certificate of workers’
compensation insurance coverage or statement required by Section
5378.1.

(H) It has provided the commission an address of an office or
terminal where documents supporting the factual matters specified
in the showing required by this subdivision may be inspected by
the commission and the Department of the California Highway
Patrol.

(I) It provides for a mandatory controlled substance and alcohol
testing certification program as adopted by the commission
pursuant to Section 1032.1.

(J) Subparagraphs (C), (F), and (H) do not apply to a
charter-party carrier of passengers engaged in the provision of a
hired driver service when a rented motor vehicle is being operated
by the hired driver.

begin insert

(K) It provides for mandatory Department of Justice criminal
background checks to check the criminal history of any driver who
is either under contract to, or employed by, the applicant to operate
a vehicle used in transportation for compensation pursuant to the
following:

end insert begin insert

(i) A driver, as defined in Section 305 of the Vehicle Code, of
a charter-party carrier, as defined in Section 5360, shall submit
to the Department of Justice fingerprint images and related
information required by the department for the purpose of
obtaining information as to the existence and content of state
convictions and state arrests and also information as to the
existence and content of a record of a state arrest for which the
department establishes that the person is free on bail or on his or
her own recognizance pending trial or appeal.

end insert begin insert

(ii) The department shall provide a state response to the
charter-party carrier pursuant to paragraph (1) of subdivision (p)
of Section 11105 of the Penal Code.

end insert begin insert

(iii) The charter-party carrier shall request from the Department
of Justice subsequent notification service, as provided pursuant
to Section 11105.2 of the Penal Code, for persons described in
clause (i).

end insert begin insert

(iv) The department shall charge a fee sufficient to cover the
cost of processing the request described in this subparagraph.

end insert begin insert

(v) A driver shall be denied employment or have his or her
contract voided if he or she is required by any law to register as
a sex offender or has been convicted of any felony, within a
seven-year period from the date of his or her application, involving
any of the following: any type of sexual offense; the manufacture,
possession for sale, transportation, or distribution of narcotics,
controlled substances, or addictive or dangerous drugs; force,
violence, threat, or intimidation against persons; kidnapping;
forgery, fraud, larceny, extortion, burglary, robbery, or theft;
credit card fraud; possession of a firearm or dangerous weapon;
resisting or obstructing a peace officer, public officer, or
emergency medical technician; or use of another vehicle for hire
in the commission of a felony. Equivalent out-of-state violations
shall be considered.

end insert begin insert

(L) Subparagraph (K) shall not apply with respect to a driver
who is required to undergo a criminal background check pursuant
to Section 33192 or 45125.1 of the Education Code, while the
driver remains employed by the employer for whom the criminal
background check was performed.

end insert begin insert

(2) Drivers hired or initially retained by a charter-party carrier
of passengers on or after January 1, 2016, shall be subject to
background checks and mandatory drug and alcohol testing prior
to employment or retention. Drivers hired or initially retained
before January 1, 2016, shall complete a background check and
drug and alcohol test before January 1, 2017.

end insert begin delete

(2)

end delete

begin insert (3) end insert  With respect to subparagraphs (B) and (F) of paragraph (1),
the commission may base a finding on a certification by the
commission that an applicant has filed, with the commission, a
sworn declaration of ability to comply and intent to comply.

begin delete

(3)

end delete

begin insert (4) end insert  The commission may require, as a precondition to the
issuance of a permit or certificate, the procurement of a
performance bond sufficient to facilitate the collection of fines,
penalties, and restitution related to enforcement actions that can
be taken against the applicant.

(b) In addition to the requirements in subdivision (a),
charter-party carriers shall meet all other state and, where
applicable, federal regulations as prescribed.

(c) The commission may delegate to its executive director or
that executive director’s designee the authority to issue, renew, or
authorize the transfer of, charter-party carrier permits or certificates
and to make the findings specified in subdivision (a) that are
necessary to that delegated authority.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 5444 is added to the end insert begin insert Public Utilities Code end insert begin insert , to
read: end insert

begin insert

begin insert 5444. end insert   

(a) A transportation network company shall do all of
the following:

(1) Participate in a pull-notice system pursuant to Section
1808.1 of the Vehicle Code to regularly check the driving records
of all participating drivers.

(2) Provide for a mandatory controlled substance and alcohol
testing certification program as adopted by the commission
pursuant to Section 1032.1.

(3) Provide for mandatory Department of Justice criminal
background checks to check the criminal history of any
participating driver who is either under contract to, or employed
by, the transportation network company to operate a vehicle used
in transportation for compensation pursuant to the following:

(A) A driver shall submit to the Department of Justice fingerprint
images and related information required by the department for
the purpose of obtaining information as to the existence and content
of state convictions and state arrests and also information as to
the existence and content of a record of a state arrest for which
the department establishes that the person is free on bail or on his
or her own recognizance pending trial or appeal.

(B) The department shall provide a state response to the
transportation network company pursuant to paragraph (1) of
subdivision (p) of Section 11105 of the Penal Code.

(C) The transportation network company shall request from the
Department of Justice subsequent notification service, as provided
pursuant to Section 11105.2 of the Penal Code, for persons
described in subparagraph (A).

(D) The department shall charge a fee sufficient to cover the
cost of processing the request described in this paragraph.

(E) A driver shall be denied employment or have his or her
contract voided if he or she is required by any law to register as
a sex offender or has been convicted of any felony, within a
seven-year period from the date of his or her application, involving
any of the following: any type of sexual offense; the manufacture,
possession for sale, transportation, or distribution of narcotics,
controlled substances, or addictive or dangerous drugs; force,
violence, threat, or intimidation against persons; kidnapping;
forgery, fraud, larceny, extortion, burglary, robbery, or theft;
credit card fraud; possession of a firearm or dangerous weapon;
resisting or obstructing a peace officer, public officer, or
emergency medical technician; or use of another vehicle for hire
in the commission of a felony. Equivalent out-of-state violations
shall be considered.

(4) Register any vehicle used in the transportation of passengers
for compensation with the commission and display on the vehicle
a suitable decal with an identifying symbol issued by the
commission.

(b) Drivers hired or initially retained by a transportation
network company on or after January 1, 2016, shall be subject to
background checks and mandatory drug and alcohol testing prior
to employment or retention. Drivers hired or initially retained
before January 1, 2016, shall complete a background check and
drug and alcohol test before January 1, 2017.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 1808.1 of the end insert begin insert Vehicle Code end insert begin insert is amended to read: end insert

1808.1.  

(a) The prospective employer of a driver who drives
a vehicle specified in subdivision (k) shall obtain a report showing
the driver’s current public record as recorded by the department.
For purposes of this subdivision, a report is current if it was issued
less than 30 days prior to the date the employer employs the driver.
The report shall be reviewed, signed, and dated by the employer
and maintained at the employer’s place of business until receipt
of the pull-notice system report pursuant to subdivisions (b) and
(c). These reports shall be presented upon request to an authorized
representative of the Department of the California Highway Patrol
during regular business hours.

(b) The employer of a driver who drives a vehicle specified in
subdivision (k) shall participate in a pull-notice system, which is
a process for the purpose of providing the employer with a report
showing the driver’s current public record as recorded by the
department, and any subsequent convictions, failures to appear,
accidents, driver’s license suspensions, driver’s license revocations,
or any other actions taken against the driving privilege or
certificate, added to the driver’s record while the employer’s
notification request remains valid and uncanceled. As used in this
section, participation in the pull-notice system means obtaining a
requester code and enrolling all employed drivers who drive a
vehicle specified in subdivision (k) under that requester code.

(c) The employer of a driver of a vehicle specified in subdivision
(k) shall, additionally, obtain a periodic report from the department
at least every 12 months. The employer shall verify that each
employee’s driver’s license has not been suspended or revoked,
the employee’s traffic violation point count, and whether the
employee has been convicted of a violation of Section 23152 or
23153. The report shall be signed and dated by the employer and
maintained at the employer’s principal place of business. The
report shall be presented upon demand to an authorized
representative of the Department of the California Highway Patrol
during regular business hours.

(d) Upon the termination of a driver’s employment, the employer
shall notify the department to discontinue the driver’s enrollment
in the pull-notice system.

(e) For the purposes of the pull-notice system and periodic report
process required by subdivisions (b) and (c), an owner, other than
an owner-operator as defined in Section 34624, and an employer
who drives a vehicle described in subdivision (k) shall be enrolled
as if he or she were an employee. A family member and a volunteer
driver who drives a vehicle described in subdivision (k) shall also
be enrolled as if he or she were an employee.

(f) An employer who, after receiving a driving record pursuant
to this section, employs or continues to employ as a driver a person
against whom a disqualifying action has been taken regarding his
or her driving privilege or required driver’s certificate, is guilty of
a public offense, and upon conviction thereof, shall be punished
by confinement in a county jail for not more than six months, by
a fine of not more than one thousand dollars ($1,000), or by both
that confinement and fine.

(g) As part of its inspection of bus maintenance facilities and
terminals required at least once every 13 months pursuant to
subdivision (c) of Section 34501, the Department of the California
Highway Patrol shall determine whether each transit operator, as
defined in Section 99210 of the Public Utilities Code, is then in
compliance with this section and Section 12804.6, and shall certify
each operator found to be in compliance. Funds shall not be
allocated pursuant to Chapter 4 (commencing with Section 99200)
of Part 11 of Division 10 of the Public Utilities Code to a transit
operator that the Department of the California Highway Patrol has
not certified pursuant to this section.

(h) (1) A request to participate in the pull-notice system
established by this section shall be accompanied by a fee
determined by the department to be sufficient to defray the entire
actual cost to the department for the notification service. For the
receipt of subsequent reports, the employer shall also be charged
a fee established by the department pursuant to Section 1811. An
employer who qualifies pursuant to Section 1812 shall be exempt
from any fee required pursuant to this section. Failure to pay the
fee shall result in automatic cancellation of the employer’s
participation in the notification services.

(2) A regularly organized fire department, having official
recognition of the city, county, city and county, or district in which
the department is located, shall participate in the pull-notice
program and shall not be subject to the fee established pursuant
to this subdivision.

(3) The Board of Pilot Commissioners for Monterey Bay and
the Bays of San Francisco, San Pablo, and Suisun, and its port
agent shall participate in the pull-notice system established by this
section, subject to Section 1178.5 of the Harbors and Navigation
Code, and shall not be subject to the fees established pursuant to
this subdivision.

(i) The department, as soon as feasible, may establish an
automatic procedure to provide the periodic reports to an employer
by mail or via an electronic delivery method, as required by
subdivision (c), on a regular basis without the need for individual
requests.

(j) (1) The employer of a driver who is employed as a casual
driver is not required to enter that driver’s name in the pull-notice
system, as otherwise required by subdivision (a). However, the
employer of a casual driver shall be in possession of a report of
the driver’s current public record as recorded by the department,
prior to allowing a casual driver to drive a vehicle specified in
subdivision (k). A report is current if it was issued less than six
months prior to the date the employer employs the driver.

(2) For the purposes of this subdivision, a driver is employed
as a casual driver when the employer has employed the driver less
than 30 days during the preceding six months. “Casual driver”
does not include a driver who operates a vehicle that requires a
passenger transportation endorsement.

(k) This section applies to a vehicle for the operation of which
the driver is required to have a class A or class B driver’s license,
a class C license with a hazardous materials endorsement, a class
C license issued pursuant to Section 12814.7, or a certificate issued
pursuant to Section 12517, 12519, 12520, 12523, 12523.5, or
12527, or a passenger vehicle having a seating capacity of not
more than 10 persons, including the driver, operated for
compensation by a charter-party carrier of begin delete passengers end delete begin insert passengers,
transportation network company, end insert or passenger stage corporation
pursuant to a certificate of public convenience and necessity or a
permit issued by the Public Utilities Commission.

begin insert

(l) (1) For purposes of this section, the term “employer” or
“prospective employer” includes a transportation network
company whose permit or certificate, including any renewal of
that permit or certificate, is subject to the requirements of Article
7 (commencing with Section 5430) of Chapter 8 of Division 2 of
the Public Utilities Code.

end insert begin delete

(l)

end delete

begin insert (2) end insert  This begin delete section shall end delete begin insert section shall end insert not be construed to change
the definition of “employer,” “employee,” or “independent
contractor” for any begin insert other end insert purpose.

(m) A motor carrier who contracts with a person to drive a
vehicle described in subdivision (k) that is owned by, or leased to,
that motor carrier, shall be subject to subdivisions (a), (b), (c), (d),
(f), (j), (k), and (l) and the employer obligations in those
subdivisions.

(n) Reports issued pursuant to this section, but only those for a
driver of a taxicab engaged in transportation services as described
in subdivision (a) of Section 53075.5 of the Government Code,
shall be presented upon request, during regular business hours, to
an authorized representative of the administrative agency
responsible for issuing permits to taxicab transportation services
pursuant to Section 53075.5 of the Government Code.

begin insert

begin insert SEC. 4. end insert   

end insert begin insert

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact
legislation that promotes public safety relating to transportation
network companies.

end delete