BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1422|
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THIRD READING
Bill No: AB 1422
Author: Cooper (D)
Amended: 7/16/15 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 9-0, 6/30/15
AYES: Hueso, Cannella, Hertzberg, Hill, Lara, Leyva, McGuire,
Morrell, Pavley
NO VOTE RECORDED: Fuller, Wolk
SENATE TRANS. & HOUSING COMMITTEE: 11-0, 7/14/15
AYES: Beall, Cannella, Allen, Bates, Gaines, Galgiani, Leyva,
McGuire, Mendoza, Roth, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 78-0, 6/2/15 (Consent) - See last page for
vote
SUBJECT: Transportation network companies
SOURCE: Author
DIGEST: This bill requires transportation network companies
(TNCs) to participate in the Department of Motor Vehicles' (DMV)
employer pull-notice (EPN) system to regularly check the driving
records of a participating driver.
ANALYSIS:
Existing law:
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1) Establishes the California Public Utilities Commission
(CPUC) to regulate privately owned public utilities and
common carriers in California. Specifies that the
Legislature may prescribe that additional classes of private
corporations or other persons are public utilities. (Article
XII of the California Constitution; Public Utilities Code
§301 et seq.)
2) Establishes the "Passenger Charter-Party Carriers Act",
which directs the CPUC to regulate, require license or permit
to operate, require insurance and workers compensation, takes
appropriate enforcement action and other provisions related
to transportation charter-party carriers (CPCs). (Public
Utilities Code §5351 et seq.)
3) 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)
4) Defines TNC as an organization, including, but not limited
to, a corporation, limited liability company, partnership,
sole proprietor, or any other 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)
5) Requires TNCs to participate in the DMV EPN system 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.
6) Establishes the EPN system at 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 license revocations,
failures to appear, accidents, driver license suspensions, or
any other actions taken against the driving privilege.
(Vehicle Code §1808.1)
7) Requires employers of drivers of specified vehicles such as
commercial truck drivers, school buses, farm labor vehicles,
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tow trucks, youth buses, paratransit vehicles, ambulances,
and 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)
8) Requires employers of drivers of certain vehicles as
described above to obtain EPN reports from DMV at least every
12 months, as specified. (Vehicle Code §1808.1)
9) Defines an employee as anyone that renders a service for
another, other than as an independent contractor or expressly
exempted. (Labor Code §3357)
10)Defines an independent contractor as any person who renders
service for a specified recompense for a specified result,
under the control of his principal as to the result of his
work only and not as to the means by which such result is
accomplished. (Labor Code §3353)
This bill requires TNCs to participate in the DMV EPN system 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.
Background
In recent years, the advent of new mobile technology has spurred
development of new software applications (apps) that are
dramatically altering the transportation industry. The new
model of transportation services allows customers to prearrange
transportation services through an online application on their
smartphone or computer. Known as TNCs, these companies, such as
Uber and Lyft, allow customers to 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. Under this model, drivers are considered independent
contractors by the TNCs and the TNCs take a commission on each
trip. While these services have grown in popularity in the last
few years, this new service has not fit neatly into the existing
laws and regulations governing transportation services.
CPUC regulation of TNCs. In September 2013, the CPUC adopted
the first phase of a two-phase decision related to TNCs. In the
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decision, the CPUC defined TNCs as a new category of CPCs
subject to the CPUC oversight and regulations. The CPUC adopted
rules to require TNCs to obtain a permit to operate from the
CPUC, require TNCs to conduct background check on drivers, check
driver records prior to driving and quarterly, thereafter,
establish a driver training program, implement a zero-tolerance
policy on drugs and alcohol, conduct vehicle inspections, and
obtain authorization from airports before conducting operations
on or into airports property. The DMV check criteria is
required to provide that a driver have no more than three points
within the preceding three years, no "major violations"
(reckless driving, hit and run, or driving with a suspended
license conviction) within the preceding three years, and no
driving under the influence conviction within the past seven
years). Subsequently, the Legislature passed AB 2293 (Bonilla,
Chapter 389, Statutes of 2014), which codified the CPUC's
definition of TNCs and established liability and insurance
requirements for TNCs and their participating drivers.
The DMV employee pull-notice. 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 enroll in the EPN
so that employers may receive automatic notice of an adverse
entry or action on a driver's driving record. However, existing
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 app, and quarterly thereafter, the
law prevents the DMV from permitting TNCs with nonemployees from
enrolling in EPN.
Employee or independent contractor? In adopting the first phase
decision regarding TNCs, the CPUC noted that TNCs could not
participate in the automatic driver's background check, the EPN,
since TNCs were not employees. The question about whether TNC
drivers are employees or independent contractors has become a
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growing debate in recent years. Most recently, the California
Labor Commission has ruled that a former Uber driver was, in
fact, an employee and ordered Uber to pay her over $4,000 for
expenses incurred while driving. As employees, Uber drivers in
the state would qualify for minimum wage, overtime, and worker's
compensation. Uber has maintained that its drivers are
independent contractors. The ruling became public when Uber
filed an appeal in a state court on June 16, 2015. Uber's
appeal is one of several cases currently up for consideration in
the courts that could decide whether TNC drivers are employees
or independent contractors. Two other cases - O'Connor, et al.,
v. Uber Technologies, Inc. et al. (Case No. C-13-3826 EMC) and
Cotter, et al., v. Uber Technologies, Inc. et al. (Case No.
13-cv-04065-VC) - are both venued in the U.S. District Court in
San Francisco. Both lawsuits were filed by drivers who claim
that, although the TNCs classify them as independent
contractors, they are actually employees and are therefore owed
certain benefits, reimbursements, and protections. The drivers
are seeking class action status in both cases.
The language in this bill requires the TNCs to participate in
the EPN program regardless of whether their drivers are
considered employees or independent contractors.
Prior/Related Legislation
AB 24 (Nazarian, 2015) requires CPC and TNCs to participate in
the DMVs EPN System, and submit all drivers to a Department of
Justice criminal background check. The bill was held in
Assembly Committee on Appropriations.
AB 828 (Low, 2015) excludes from the definition of "commercial
vehicle," for purposes of the Vehicle Code, any motor vehicle
operated in connection with a TNC. The bill passed the Assembly
on a vote of 71-1 and is currently awaiting consideration by the
Senate Committee on Energy, Utilities and Communications.
AB 1360 (Ting, 2015) exempts a rideshare program operated by a
TNC 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. The bill passed
the Assembly on a vote of 73-0 and is currently awaiting
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consideration by the Senate Committee on Energy, Utilities and
Communications.
AB 612 (Nazarian, 2014) required CPCs to participate in the DMV
EPN system, and submit all drivers to a Department of Justice
criminal background check. The bill was held in the Assembly
Committee on Transportation.
AB 2293 (Bonilla, Chapter 389, Statutes of 2014) established
guidelines for insurance coverage for TNCs to ensure personal
and financial safety of consumers.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified8/18/15)
California Airport Council
Long Beach Police Officers Association
Los Angeles County Professional Peace Officers Association
Riverside Sheriffs' Association
Sacramento County Deputy Sheriffs' Association
San Diego Regional Chamber of Commerce
Uber Technologies, Inc.
OPPOSITION: (Verified8/18/15)
Greater California Livery Association
ARGUMENTS IN SUPPORT: Supporters state that AB 1422 promotes
driver and public safety by requiring TNCs to participate in the
DMV EPN program and helps improve the safety of passengers
utilizing these transportation services. The author notes that,
currently, TNCs must manually pull DMV records on a quarterly
basis to review driving records - a process that is both
inefficient and slow to catch such things as driving under the
influences, accidents or license suspensions.
ARGUMENTS IN OPPOSITION:The Greater California Livery
Association argues that the "contractual status of the driver of
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a transportation network vehicle, employee or independent
operator, is not and should not, be the subject of the AB 1422."
They argue that this bill "should be amended to delete any
reference to the classification of the driver's status; absent
that amendment, it could be perceived that the Legislature is
encouraging the "independent contractor" business model to be
utilized by CPUC regulated TNCs."
ASSEMBLY FLOOR: 78-0, 6/2/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,
Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Chávez, Grove
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
8/19/15 20:39:16
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