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