BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1422


                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1422 (Cooper)


          As Amended  July 16, 2015


          Majority vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  |78-0  |(June 2, 2015) |SENATE: | 37-0 |(August 27,      |
          |           |      |               |        |      |2015)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          Original Committee Reference:  U. & C.


          SUMMARY:  Requires transportation network companies (TNC) to  
          participate in the Department of Motor Vehicles (DMV) Employer  
          Pull Notice System (EPN).  Specifically, this bill provides that  
          a TNC is eligible and required 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.


          The Senate amendments make non-substantive clarifying changes.


          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  








                                                                    AB 1422


                                                                    Page  2


            carriers (CPC), investigate complaints against carriers, and  
            cancel, revoke, or suspend permits and certificates for  
            specific violations.  (Public Utilities Code Section 5387)
          2)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  
            Section 5431)


          3)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 Section 1808.1)


          4)Defines an employee as anyone that renders a service for  
            another, other than as an independent contractor.  (Labor Code  
            Section 3357)


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          COMMENTS:  


          1)Author's Statement:  "AB 1422 promotes driver and public  
            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  
            CPCs and passenger stage companies, which are regulated by the  








                                                                    AB 1422


                                                                    Page  3


            CPUC.


          3)What are CPCs?  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.


          4)What are TNCs?  Beginning as early as 2009, a new model of  
            transportation service began springing up in cities across the  
            United States.  Known as TNCs, these companies work by  
            allowing 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.  


            Although TNCs do not neatly fall into the conventional  
            definition of either taxis or limousines, the CPUC does  
            believe that TNCS are currently providing passengers  
            transportation for compensation, and reasonably concludes that  
            TNCs are CPCs, therefore, falling under the CPUC's existing  
            jurisdiction over these services. 


          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.








                                                                    AB 1422


                                                                    Page  4


            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.  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 provide that a TNC is  
            eligible and required to participate in the DMV EPN regardless  
            if a participating driver is an employee or an independent  
            contractor.  


           Analysis Prepared by:  Edmond Cheung / U. & C. / (916) 319-2083   
            FN: 0001461