Gary Buffo, the CEO of Pure Luxury Transportation in Petaluma, Calif., is leading the National Limousine Association's annual Capitol Hill lobbying event April 26-27 in his fourth year as NLA President. (LCT file photo)
TORRANCE, Calif. — As limousine industry leaders lobby across Capitol Hill April 27, they circulate with the confidence of a three-pronged approach in pursuing competitive fairness with Transportation Network Companies (TNCs).
In an interview at LCT offices before heading to Washington D.C for the annual National Limousine Association's Day on the Hill lobbying event, NLA President Gary Buffo outlined how the group has worked hard during the last year to align its public relations, legislative lobbying, and appeals to enforce labor laws on employees versus independent contractors. The NLA also supports class-action labor lawsuits filed by Uber drivers contending they are employees.
The labor angle will be a key focus of this week’s Day on the Hill, where teams of NLA and state association leaders will talk with Congressional representatives and their staff about enforcing labor laws against TNCs already on the books, Buffo said. “Our task is really simple. It’s for them to contact the Department of Labor and mandate they enforce labor laws, whether it's in California, or on a regional or federal basis. If we can get it done on a federal basis, then the states will have to comply. We have a better chance of the states complying if we get federal DOL to enforce the laws.”
The way Uber controls drivers and passengers clearly falls into the realm of employment, and the drivers should be legally treated and categorized as employees, Buffo said. “They are in control of everything. There’s no way drivers should be classified as contractors. If they must abide by the laws, then their business model certainly will have to change.”
Another consequence of so many TNC drivers being classified as independent contractors is the loss of substantial tax revenue, Buffo pointed out. In all likelihood, many 1099 drivers do not file taxes, and the IRS lacks the manpower to track it all, given the thousands of TNC drivers. If the drivers were employees, they would be on payrolls subject to tax withholding.
“If you look at how many drivers that just Uber and Lyft claim they have, and if you calculate how many tax dollars the states and federal government are losing from employment taxes, and social security, it’s in the billions of dollars now,” Buffo said.
That may motivate legislators to stanch those losses through fair application of labor laws. Conversely, the losses could also be passed on to other businesses in the form of higher taxes if TNCs continue to grow with the independent contractor model, he warned.
On the public relations front, the NLA is seeing more media response since entering into an annual $450,000 contract with the Manhattan-based public relations firm Evins in January 2015. The NLA board voted to renew the contract another year. “We believe we’re having a global impact now,” Buffo said. “Whenever an Uber article would come out at the start of the first year, Evins wouldn’t get a call. Most recently when a major article came out, Evins got 73 phone calls in one day wanting a statement from us.”
The higher media profile generated by Evins coupled with the legislative and advocacy efforts by the NLA’s contracted lobbying firm, Cornerstone Government Affairs, help the NLA get through doors and be taken seriously, Buffo said. “You've always got to punch on the media side and throw punches in Washington D.C.,” Buffo said. “You have to be there, you have to talk to your representatives. We are their constituents. We have to tell them what our opinions are.”
As a result of increased public relations costs, stronger legislative lobbying and technology efforts, the NLA voted Feb. 28 to double its member dues for 2016 to make up for funds that have been taken out of its reserves. The extra dues bill will hit members this summer. [The Taxi Limousine & Paratransit Association (TLPA), another trade group working on TNC remedies, approved a similar members dues increase last year].
“Many board directors were approached after the annual meeting (Feb. 29), myself included, by members who came up and shook my hand and really supported doing a double dues assessment mid-year,” Buffo said. “Our dues have been so small that we really didn’t have enough revenue to make that big of an impact. We're actually trying to play a little bit of catch-up so we don't get too far behind.”
So far, the dues increase applies only to 2016. “We're going to look at it year-over-year and see where we're at, but first and foremost it's our opportunity to show our membership what we did with those revenues so they can see the value of their return on their investment in the association,” he said.
With the recent termination of its contract with Deem, a cloud-based travel services technology provider, the NLA is looking at ways to reset its push toward binding operators together nationwide via an app-based ride reservation system. Buffo concedes the industry is not meant to be on-demand, like a TNC or taxi service, but it can grow its traditional reservation-based luxury niche to include a high quality near-demand service.
“I think we are more of a premium service in a premium marketplace,” Buffo said. “People use us because they need to know the car's going be there at a certain time to get them from point A to point B to point C to point D, and then back to point A at the end of the day. I think that market will continue to grow and expand over the years to come."
“I think if you say minimum 15 minutes to maximum half an hour to get a car, then we're golden,” Buffo added. “We’ll change the perception of corporate clients.”
The industry’s key technology challenge is to enable a wider network of clients to see their chauffeured cars live on an app map before a ride and be able to connect directly with their chauffeurs, Buffo said. “I think we have to figure out a way to give our customers the ability to see a chauffeured car from the time they land and be able to connect directly with their chauffeurs and see where they are. You shouldbe able to call the chauffeur right from the application to get to your destination.”
Buffo predicts the combination of NLA and industry efforts and the wider pressures on TNCs will ultimately leave the limousine industry in a position for long-term growth and influence.
Uber faces so many lawsuits and negative publicity about crimes and poor safety that it must spend large sums on legal fees and public relations, Buffo said. Positioned against a discounted pricing model, disgruntled drivers and serious safety concerns, the TNCs could either be transformed, splintered, or sold off into other companies.
“At some point, I don't think the money is going to continuously get infused into Uber,” Buffo said. “They’re not profitable based on the numbers I've seen. I think they were profitable early on when they started. I don't think they've been profitable ever since because if they were, they'd be gloating about it. Their burn rate on legal is huge. I think the investment money slowly starts deteriorating because...would you invest in a company that was burning 25% of its revenue to legal issues? I think ego is what buries the company or ends up getting that company sold to someone else.”
Despite the TNC and regulatory challenges, Buffo sees a healthy environment for chauffeured transportation overall as it focuses on what it does best: Service quality and safety.
“I know there are companies for sale right now with people getting out of the industry and doing other things because they just can't afford to operate,” he said. “Certain areas in our country are affected by TNCs because everybody is trying that service. And then there are areas that aren't affected at all. So I think we as an industry need to continuously work on public relations and building a more positive global message about the NLA, about who we are, and what we do, while at the same time fixing the technology."