Regulations

CA Legislative Bills On Limos, TNCs Go 2-1 In Industry Favor

Posted on August 29, 2014 by - Also by this author - About the author

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SACRAMENTO, Calif. — The limousine industry in the state with the most operators nationwide came out ahead in its battle with Transportation Network Companies (TNCs) this week as three key pieces of state legislation wound their way through committees and legislative chambers.


A measure (AB2293) that would increase insurance requirements for TNCs such as Uber appears headed for the Governor's signature after legislators, regulators, insurance industry representatives and TNC lobbyists worked out a compromise deal this week.

Meanwhile, SB611, a limousine safety bill that includes a repeal of livery license plate fees for charter-party carriers, was passed by the Senate and moves to the Governor. AB612, which would have mandated a stronger federal role in background checks and more active monitoring of driving records by the DMV, died in committee.

AB2293
Two lobbyists working for the Greater California Livery Association, the trade group representing limousine operators, said AB2293, which boosts insurance coverage requirements for TNC vehicles, represents a breakthrough in legislation that establishes more parity between TNCs and chauffeured transportation companies.

Gregg Cook and Rob Grossglauser of Government Affairs Consulting in Sacramento on Thursday outlined the bottom line difference in insurance coverage for limousine companies versus TNCs. Under AB2293, TNCs are codified as charter-party carriers, subject to regulation by the California Public Utilities Commission, the same state agency that regulates limousines.

Insurance coverage levels for limousine companies remain unchanged: $750,000 of total insurance coverage per passenger sedan, whether it is carrying a client(s) or not.

But for TNCs, insurance coverage will vary, depending on three service/non-service modes:

  • When the TNC app is on and the driver is accepting a ride, a $1 million insurance coverage policy must kick in and remain until the ride is completed. In addition, when there is a passenger in the vehicle, a $1 million policy covering uninsured and underinsured drivers must be in effect.
  • When the driver app is on but no passenger is requesting service, the insurance coverage must be at $100,000 for the driver and at least $200,000 for the TNC. (The GCLA had advocated a $1 million coverage requirement for this mode as well).
  • When a TNC driver who has the app off and is not in service, he must be covered by the minimum state personal insurance requirements of 50/100/50: $50,000 bodily injury per person / $100,000 bodily injury or death per accident / $50,000 property damage.

“This is a significant win for the GCLA,” Cook said. The very notion of legislating insurance requirements for TNCs was made possible thanks to a presentation by GCLA President Rich Azzolino and board director Lee Martinez during a March 21 investigative hearing by the California Department of Insurance Commissioner, Dave Jones, he said.

As a result of the information provided by Azzolino, Martinez and representatives from taxi industry groups, Jones sent recommendations to the CPUC supporting more comprehensive commercial insurance requirements for vehicles that serve TNCs. That premise got the attention of legislative sponsors and ultimately helped define the debate and spur the rationale for AB2293.

“The Insurance Commissioner was so enthralled with Rich’s testimony and the visual aid Rich used which showed all insurance requirements that he wrote a letter of opinion to the PUC,” Cook said. “In that letter, he says we need to address this three party problem: Off app, on app, passenger w/on app.”

Rich Azzolino, speaking on behalf of the GCLA membership, said AB2293 comes down to this: “When they’re driving around in TNC personal cars, and the minute they turn on their app, they have to have $1 million as commercial primary insurance. That’s more than what we are required at $750,000, but in my eyes, that’s a victory. Now, we have to make sure it’s for real in practice, and not a sham $1 million primary insurance. We still need to know: Who’s going to watch this? What will the parameters be?”

Cook predicted that in addition to following stricter insurance requirements, TNCs could face more scrutiny about labor practices and driver contract terms given a recent court decision against that went against FedEx in its handling of contract drivers. The precedent could potentially exist to consider the labor arrangements of TNC drivers as mimicking those of full-time employees, thereby triggering the application of federal and state labor rules.

“There’s a new potential with the FedEx decision on independent contractors that says if you are under their direction, you are performing an employee function,” Cook said. “That will open a new can of worms for next year.”

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