BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:   April 21, 2016 


                     ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                   Mike Gatto, Chair


          AB 2777  
          (Nazarian) - As Amended April 14, 2016


          SUBJECT:  Transportation network company:  criminal history


          SUMMARY:  Requires the Department of Justice (DOJ), upon request  
          of a Transportation Network Company (TNC), to provide a TNC with  
          the criminal history and arrest information of its employees and  
          contractors.  Specifically, this bill:  


          1)Requires the DOJ, at the request of a TNC, for an individual who  
            is employed, retained, contracted, or otherwise compensated to  
            perform services coordinated by the TNC either of the following:


             a)   State summary criminal history information, as specified;  
               or


             b)   Subsequent arrest notification services, as specified.


          2)Requires the DOJ to charge the TNC a fee sufficient to cover the  
            cost of processing a request.


          EXISTING LAW:  








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          1)Establishes the "Passenger Charter-Party Carriers Act," which  
            directs the California Public Utilities Codes (CPUC) to issue  
            permits or certificates to Charter Party Carriers (CPCs),  
            investigate complaints against carriers, and cancel, revoke, or  
            suspend permits and certificates for specific violations.   
            (Public Utilities Code Section 5381 et seq.)
          2)Defines "charter party carriers of passengers" as every person  
            engaged in the transportation of person by motor vehicle for  
            compensation, whether in common or contract carriage, over any  
            public highway in the state.  (Public Utilities Code Section  
            5360)
          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  
            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 Section 5431)


          4)Requires the DOJ to furnish state summary criminal history  
            information to specified entities, if needed in the course of  
            their duties and, when specifically authorized, federal-level  
            criminal history information, upon showing of a compelling need,  
            provided that when information is furnished to assist an agency,  
            officer, or official of state or local government, a public  
            utility, or any other entity in fulfilling employment,  
            certification, or licensing duties, as specified. (Penal Code  
            Section 11105)


          5)Authorizes the DOJ to charge the person or entity making the  
            request a fee that it determines to be sufficient to reimburse  
            the department for the cost of furnishing the information. In  
            addition, the DOJ may add a surcharge to the fee to fund  
            maintenance and improvements to the systems from which the  
            information is obtained. Notwithstanding any other law, any  
            person or entity required to pay a fee to the DOJ for  
            information received, as specified, may charge the applicant a  
            fee sufficient to reimburse the person or entity for this  
            expense. (Penal Code Section 11105).






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          6)Authorizes the DOJ or any state or local law enforcement agency  
            to require the submission of fingerprints for the purpose of  
            conducting summary criminal history information checks that are  
            authorized by law. (Penal Code Section 11105) 



          7)Requires, notwithstanding any other law, whenever state summary  
            criminal history information is initially furnished, as  
            specified, the DOJ to disseminate the following information:



             a)   Every conviction rendered against the applicant.



             b)   Every arrest for an offense for which the applicant is  
               presently awaiting trial, whether the applicant is  
               incarcerated or has been released on bail or on his or her  
               own recognizance pending trial.



             c)   Every arrest for an offense for which the records of the  
               DOJ do not contain a disposition or did not result in a  
               conviction, provided that the DOJ first makes a genuine  
               effort to determine the disposition of the arrest. However,  
               information concerning an arrest shall not be disclosed if  
               the records of the DOJ indicate or if the genuine effort  
               reveals that the subject was exonerated, successfully  
               completed a diversion or deferred entry of judgment program,  
               or the arrest was deemed a detention.



             d)   Every date and agency name associated with all retained  
               peace officer or nonsworn law enforcement agency employee  
               preemployment criminal offender record information search  






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               requests.



             e)   Sex offender registration status of the applicant.  (Penal  
               Code Section 11105)


          FISCAL EFFECT:  Unknown.


          COMMENTS:  


          1)Background:  California Constitution, Article XII establishes  
            the CPUC and grants it the authority to regulate public  
            utilities.  In addition, the CPUC has more limited authority  
            over other corporations, including railroads, rail transit, and  
            CPCs, among others.  Beginning as early as 2009, a new model of  
            transportation known as TNCs allowed patrons to prearrange  
            transportation services through an online application on their  
            smartphone or computer.  Although TNCs do not neatly fall into  
            the conventional definition of a CPC, the CPUC believes 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  
            such services. 


          2)Criminal Background Checks:  CPUC regulations require TNCs to  
            run criminal background checks on all hired drivers, but it does  
            not specify the parameters for which TNCs must go about doing  
            these background checks.  As such, TNCs generally contract with  
            third party firms that they argue provide a more comprehensive  
            review necessary to ensure passenger safety.  For example, Uber  
            argues that its background screening process checks primary  
            sources and court records going back seven years, in addition to  
            other national databases.


            However, news reports continue to identify situations in which  






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            TNC drivers have been accused of criminal situations such as  
            rape, assault, kidnapping, among others.  The CPUC currently has  
            a pending rulemaking process examining TNC regulations,  
            including whether or not to require fingerprints as part of the  
            TNC background checks. 


          3)RAP Sheet: The state summary criminal history information,  
            commonly referred to as the Record of Arrests and Prosecutions,  
            or "RAP sheet," is compiled by the DOJ and includes information  
            pertaining to the identification and criminal history of any  
            person, such as name, date of birth, physical description,  
            fingerprints, photographs, arrests, dispositions, and similar  
            data. The disclosure of criminal history information is closely  
            guarded. Penal Code Section 13300 et. seq., demonstrates that  
            the Legislature intended nondisclosure of criminal offender  
            record information to be the general rule. 


            While some entities are able to receive the information in the  
            course of their duties, others can only obtain that information  
            if there is compelling need and subject to specific provisions  
            of the Labor Code, which regulates inquires by employers on  
            employee criminal backgrounds.  Examples of entities that are  
            authorized to receive such information include banks, private  
            security, school contract employees.  Absent a compelling need,  
            such information should be protected to ensure privacy and  
            prevent discrimination among employers and employees.


            This bill requires the DOJ, at the request of a TNC, to provide  
            the TNC with the state summary criminal history information and  
            any subsequent arrest notification services of its employees or  
            contactors.  This bill requires the DOJ to charge the TNC a fee  
            sufficient to cover the cost of processing a request.   
            Currently, TNCs are not required to provide the DOJ with  
            fingerprints of its employees or contractors. Hence, it is  
            unclear how the DOJ would comply with the request proposed under  
            this bill, as it would not have the necessary information of  
            each employee or contractor available to provide the TNC, if  
            requested.






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          4)Arguments in Opposition:  According to the Internet Association  
            and TechNet, "AB 2777 attempts to provide the statutory  
            authorization that would allow the [DOJ] to perform background  
            checks and arrest notifications of TNC drivers.  As currently  
            drafted, this authorization is permissive - only at the request  
            of a TNC - but we are concerned that this could easily become an  
            unnecessary legislative mandate.  In addition, this  
            authorization is premature as the [CPUC] has already stated  
            their intent to examine background checks in Phase III of their  
            TNC rulemaking process."


          5)Double Referred:  This bill was previously heard in the Assembly  
            Committee on Public Safety and passed out on a 7-0 vote.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          None on file.




          Opposition


          The Internet Association


          Lyft


          TechNet






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          Uber Technologies, Inc.




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