BILL ANALYSIS Ó
AB 24
Page 1
Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
24 (Nazarian) - As Amended April 22, 2015
-----------------------------------------------------------------
|Policy |Utilities and Commerce |Vote:|8 - 2 |
|Committee: | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| |Transportation | |11 - 5 |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill places new safety-related operating requirements on
transportation network companies (TNCs) and their drivers.
Specifically, this bill:
AB 24
Page 2
1)Prohibits the California Public Utilities Commission (PUC)
from issuing or renewing a permit or certification to a TNC
unless the applicant, in addition to meeting existing
requirements, participates in the DMV's Employer Pull Notice
(EPN) system, and clarifies that all charter-party carriers
(CPCs) are also subject to this requirement.
2)Requires TNCs to register any vehicle used in the
transportation of passengers for compensation with the PUC,
and requires TNC vehicles to display a distinctive identifying
symbol as prescribed by PUC.
3)Requires TNCs to provide a mandatory controlled substance and
alcohol testing certification program.
4)Stipulates that drivers hired or initially retained by a TNC
on or after January 1, 2016, are subject to mandatory drug and
alcohol testing prior to employment or retention. Drivers
hired or initially retained before January 1, 2016, are
required to complete a drug and alcohol test before January 1,
2017.
FISCAL EFFECT:
1)DMV. There are likely over 150,000 TNC drivers currently in
California-and many more over the course of any year-who would
have to be enrolled in the EPN by their respective TNCs. (Uber
alone indicates that it has more than 100,000 active drivers
in the state.) The DMV's costs for this enrollment will be
covered by a $5 per enrollee fee. Likewise, DMV's costs for
providing reports to a TNC following any moving violation by
their drivers will be covered by a $1 fee per report. DMV
indicates this additional workload can be managed within
existing resources.
AB 24
Page 3
2)PUC. Given the significant number of current, and probably
future TNC drivers, the PUC's workload will expand
considerably. PUC staff currently process by hand vehicle
registration information provided by CPCs. This database
currently includes about 18,000 vehicles. The commission
believes that developing an online registration system will be
the most cost-effective approach to handling the exponential
increase in workload associated with this bill, though the
imposition of the bill's requirements could dissuade some
portion of TNC drivers, most of which work part-time, from
continuing in this occupation. One-time costs are estimated to
be at least $500,000 for an IT consultant and $180,000 for
three positions to implement the initial volume of
registrations. Ongoing workload related to registering
additional TNC vehicles, oversight of the TNC's drug and
alcohol testing program, responding to questions from TNCs and
their drivers regarding requirements, forms, suspensions,
reinstatements and revocations, and maintenance of the IT
system, will require three to five positions at an annual cost
of $230,000 to $350,000. [Transportation Reimbursement
Account]
COMMENTS:
1)Background. TNCs allow patrons to prearrange transportation
services through an online application on their smartphone or
computer. Patrons request a ride to a predetermined location,
and the application connects them with a TNC driver. Payment
is processed through the application so that no physical
financial transaction occurs during the trip itself between
the patron and the driver. Under this model, drivers are
considered independent contractors and TNCs take a commission
on each trip.
AB 24
Page 4
In a September 2013 decision, the PUC, which regulates various
transportation services, began regulating TNCs by creating a
distinct new category of CPCs. The decision requires TNCs to
obtain a permit from the PUC, conduct criminal background
checks on drivers, check driver's records, establish a driver
training program, implement a zero-tolerance policy on drugs
and alcohol, conduct vehicle inspections, and obtain
authorization from airports before conducting any operations
on or into airport property. The commission is currently in
the process of rolling out the second phase of this decision,
which will include an evaluation of the original set of
regulations and also consider any modifications to existing
regulations relative to other CPC categories.
2)Purpose. AB 24 is the author's second attempt to remedy
inconsistent requirements between TNCs and other categories of
CPCs. The author notes, "overall, AB 24 ensures the public is
safe and closes the gaps that currently exist when
transporting people for hire. AB 24 sets minimum safety
standards that do not go beyond current regulations of
transportation companies while not overbearing an innovative
industry."
DMV's EPN was established as a voluntary program in 1983 to
provide employers and regulatory agencies with a means of
providing driver safety through the ongoing review of driver
records. The current EPN system is designed to automatically
generate a report of a driver's record and electronically send
the report to the employer under specific circumstances,
including: upon enrollment of a driver, annually from the date
of employment, or whenever a driver commits certain moving
violations. Approximately 1.6 million commercial drivers are
currently enrolled in the EPN system. Due to their status as
independent contractors, TNC drivers are not subject to the
same requirement. AB 24 will expand the EPN system by
clarifying that all CPC drivers, including TNC drivers, are
required to enroll.
AB 24
Page 5
The commission's decision required TNCs to implement a zero
tolerance policy and to suspend a driver promptly after a zero
tolerance complaint is filed. However, the PUC regulations do
not require TNC drivers to undergo mandatory and periodic
alcohol and controlled substance testing like other CPCs, as
will be required under AB 24.
In support, the California Labor Federation asserts "AB 24
will level the playing field for all transportation companies
regulated by the PUC regardless of the technology used to book
the service. AB 24 sets reasonable standards to ensure public
safety and a fair market for transportation services."
3)Opposition. Uber and Lyft contend that their systems, which
allow for instant feedback on driver performance from
customers, including suspected driver impairment, are more
effective than random drug testing. Both companies note that
the vast majority of their drivers are part-time. Lyft states
that 78% of its drivers work less than 15 hours per week, and
Uber states that its average driver works between 15 and 20
hours per month. Both companies argue that the bill would
create unnecessary regulatory burdens on their drivers.
4)Related Legislation. AB 1422 (Cooper), also on today's
committee agenda, requires TNCs to participate in the EPN.
5)Prior Legislation. AB 612 (Nazarian) of 2014, which required
CPCs, including TNCs, to participate in DMV's EPN and to
submit all drivers to a Department of Justice criminal
background check, which held in the Assembly Committee on
Transportation.
AB 24
Page 6
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081