BILL ANALYSIS Ó
AB 1422
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
AB 1422
(Cooper) - As Amended March 26, 2015
SUBJECT: Transportation network companies
SUMMARY: This bill authorizes transportation network companies
(TNC) to participate in the Department of Motor Vehicles (DMV)
Employer Pull Notice System (EPN). Specifically, this bill:
a)Authorizes a TNC to participate in the DMV EPN to regularly
check the driving records of a participating driver regardless
of whether the participating driver is an employee or an
independent contractor of the TNC.
EXISTING LAW:
1)Establishes the "Passenger Charter-Party Carriers Act" (CPC),
which directs the California Public Utilities Commission
(CPUC) to issue permits or certificates to charter party
carriers (CPC), investigate complaints against carriers, and
cancel, revoke, or suspend permits and certificates for
specific violations. (Public Utilities Code §5387)
2)Defines "charter-party carrier of passengers" as every person
engaged in the transportation of persons by motor vehicle for
compensation, whether in common or contract carriage, over any
public highway in the state. (Public Utilities Code §5360)
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3)Defines a "transportation network company" to mean an
organization, including, but not limited to, a corporation,
limited liability company, partnership, sole proprietor, or
any entity operating in California that provides prearranged
transportation services for compensation using an
online-enabled application or platform to connect passengers
with drivers using a personal vehicle. (Public Utilities Code
§5431)
4)Establishes the EPN administered by the DMV that provides the
employer of a driver who drives a specified type of vehicle
with a report showing the driver's current public record and
any subsequent convictions, driver's license revocations,
failures to appear, accidents, driver's license suspensions,
driver's license revocations, or any other actions taken
against the driving privilege. (Vehicle Code §1808.1)
5)Requires employers of drivers of specified vehicles, such as
commercial truck drivers, school buses, farm labor vehicles,
tow trucks, youth buses, paratransit vehicles, ambulances,
vehicles that transport hazardous materials, to show EPN
reports during regular business hours upon the request of the
California Highway Patrol. (Vehicle Code §1808.1)
6)Requires employers of drivers of specified vehicles as
described above to obtain EPN reports from DMV at least every
12 months that are to be signed, dated, and maintained by the
employer. (Vehicle Code §1808.1)
7)Defines an employee as anyone that renders a service for
another, other than as an independent contractor. (Labor Code
§3357)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "AB 1422 promotes driver and public
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safety by authorizing TNCs to participate in the DMV pull
notice program and helps improve the safety of passengers
utilizing these transportation services."
2)Background: California law regulates different modes of
passenger transportation for compensation including taxi
services, which are regulated by cities and/or counties; and
passenger stage companies (PSC) and CPCs, which are regulated
by the CPUC. Beginning as early as 2009, a new model of
transportation service began springing up in cities across the
United States. Known as transportation network companies,
these companies allow patrons to prearrange transportation
services through an online application on their smartphone or
computer. Patrons would request a ride to a predetermined
location and the application would connect 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. The TNC takes a
commission on each trip. The development of TNCs has made the
ability for passengers seeking transportation for compensation
more readily available to the general public.
3)What are Passenger Carriers? The CPUC is in charge of
regulating passenger carriers. Passenger carriers include
services such as PSCs and CPCs. PSCs are services that
provide transportation to the general public on an individual
fare basis, such as scheduled bus operators, which are buses
that operate on a fixed route and scheduled services, or
airport shuttles, which operate on an on-call door-to-door
share the ride service.
CPCs are services that charter a vehicle, on a prearranged
basis, for the exclusive use of an individual or group.
Charges are based on the mileage or time of use, or a
combination of both. The CPUC does not regulate the level of
charges for CPCs. Types of CPCs include limos, tour buses,
sightseeing services, and charter and party buses.
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The CPUC requires CPCs to meet a number of requirements until
an operating permit or certificate is issued. These
requirements include providing sufficient proof of financial
responsibility, maintain a preventative maintenance program
for all vehicles, possessing a safety education and training
program, and regularly checking the driving records of all
persons operating vehicles used in transportation for
compensation.
4)What are Transportation Network Companies? In September 2013,
a CPUC decision put TNCs under the purview of the CPUC,
allowing it to exercise and enforce regulatory and safety
requirements against TNCs. The CPUC defined TNCs as an
"organization, including, but not limited to, a corporation,
limited liability company, partnership, sole proprietor, or
any entity, operating in California that provides prearranged
transportation services for compensation using an
online-enabled application or platform to connect passengers
with drivers using a personal vehicle." The CPUC decision
requires TNCs to obtain a permit from the CPUC, conduct
criminal background checks of drivers, 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.
Subsequently, the legislature passed AB 2293 (Bonilla) Chapter
389, Statutes of 2014, which codified the CPUC's definition of
TNCs and imposed certain liability and other insurance
coverage for TNCs and their participating drivers. The bill
defines when personal and commercial auto insurance come into
effect, and at what levels, when the driver logs onto the
application until the driver accepts a ride request, and for
when a ride request is accepted until the passenger exits the
vehicle. The bill sought to make a clear distinction between
when a vehicle is being used for TNC business activities and
must require commercial insurance, and when a vehicle is not
being used for TNC business activities at which time the
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driver's personal auto insurance is in effect.
5)DMV EPN: The DMV EPN was created as a means for employers and
regulatory agencies to ensure driver safety through the
ongoing review of driver records. The system is designed to
generate a report of a driver's record and electronically send
the report to the employer under specific circumstances such
as upon enrollment of a driver, annually from the date of
employment, or whenever a driver commits certain moving
violations. Most commercial drivers, including drivers
transporting property, passengers, and household goods are
required to participate in the EPN.
Specific types of CPC drivers are required to be enrolled in
the EPN so that employers may receive automatic notice of an
adverse entry or action on a driver's driving record.
However, current law limits enrollment in the EPN to
employees. Although TNCs are required to check each driver's
driving record prior to allowing a driver on the TNC platform,
and quarterly thereafter, the DMV does not permit TNCs with
nonemployees from enrolling in EPN.
The author may wish to consider an amendment to explicitly
require TNCs to participate in the DMV EPN, instead of simply
authorizing them to participate.
6)Employees or Independent Contractors? Under current law, the
DMV EPN is limited to employees. Under California law, an
employee is anyone who renders a service for another, other
than as an independent contractor. There is no set definition
of the term "independent contractor." In general, an
employee is anyone who performs a service for another if they
can control what will be done and how it will be done. This
is so even when the employee is given freedom of action. What
is most important is that the other person has the right to
control the details of how the service is performed.
Furthermore, in general, an independent contractor is
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self-employed. The general rule is that the payer has the
right to control or direct only the result of the work but not
what will be done and how it will be done. There has been a
growing debate over whether or not TNC drivers are considered
employees or independent contractors of the TNC. This issue
is currently pending litigation in United States District
Court. This bill, however, would authorize a TNC to
participate in the DMV EPN regardless if a participating
driver is an employee or an independent contractor.
7)Suggested Amendments:
5444. A transportation network company may shall participate
in the pull-notice system established pursuant to Section
1808.1 of the Vehicle Code to regularly check the driving
records of a participating driver regardless of whether the
participating driver is an employee or an independent
contractor of the transportation network company.
8)Arguments in Support: According to the Sacramento County
Deputy Sheriffs' Association, the Los Angeles County
Professional Peace Officers Association, and the Long Beach
Police Officers Association, "AB 1422 will improve public
safety by providing TNCs with timely information, thereby
allowing the TNCs to remove dangerous drivers from their
driver pool."
9)Related Legislation:
AB 24 (Nazarian) 2015: This bill would require charter party
carriers and transportation network companies to participate
in the Department of Motor Vehicles Employer Pull Notice
System, and submit all drivers to a Department of Justice
criminal background check.
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AB 828 (Low) 2015: This bill would exclude from the
definition of "commercial vehicle," for purposes of the
Vehicle Code, any motor vehicle operated in connection with a
transportation network company.
AB 1360 (Ting) 2015: This bill would exempt a rideshare
program operated by a transportation network company that
arranges a ride among multiple passengers who share the ride,
in whole or in part, from computing transportation charges
based on a vehicle mileage or time of use, provided that the
fare for each passenger is less than the fare that would be
charged to a single passenger traveling alone.
10)Prior Legislation:
AB 612 (Nazarian) 2014: Requires charter-party carriers to
participate in the Department of Motor Vehicles Employer Pull
Notice system, and submit all drivers to a Department of
Justice criminal background check. Held in the Assembly
Committee on Transportation.
AB 2293 (Bonilla) 2014: Establishes guidelines for insurance
coverage for Transportation Network Companies to ensure
personal and financial safety of consumers. Chaptered by the
Secretary of State - Chapter 389, Statutes of 2014.
11)Double Referred: This bill is double referred to the
Assembly Committee on Transportation.
REGISTERED SUPPORT / OPPOSITION:
Support
AB 1422
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Sacramento County Deputy Sheriffs' Association
Long Beach Police Officers Association
Los Angeles County Professional Peace Officers Association
Uber Technologies, Inc.
Opposition
Greater California Livery Association
Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083