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

Martin Romjue
Posted on August 29, 2014
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.

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.”

While SB611 and AB2293 likely will be signed by Gov. Jerry Brown and become law, the AB612 measure died in the Assembly Transportation Committee Tuesday. The bill needed nine of 16 votes to get out of committee, but only five members voted yes, four no, and seven strategically abstained, Cook said. The measure was supported by the GCLA but opposed by TNCs and the California Bus Association.

According to Cook and Grossglauser, the bill would have required:

  • All drivers and employees of charter-party carriers undergo a California Department of Justice Criminal Background Check, and the result of that examination be forwarded to the employer. Individuals employed before Jan. 1, 2015 would have one year to complete the background check. Individuals employed on or after Jan. 1, 2015 would have to successfully complete the check before employment. Employees would responsible for the cost of the background check.
  • Allow the SPAB (School Pupil Activity Bus) background check to qualify for SPAB drivers employed by a charter-party carrier contracted by a school district to transport students to comply with the background check requirement. If the employee also works for a second company that does not have school district contract, the employee would be required to comply with all provisions of AB 612.
  • Require that all employees of a charter-party carrier be subject to drug and alcohol testing and their driving records participate in the Department of Motor Vehicles “Pull-notice” program.

While the bill failed, its provisions could still be enforced by the CPUC, Azzolino said. AB612’s sponsor, Assemblyman Adrian Nazarian, D-46th, plans to reintroduce it in January at the start of the next legislative session.

“It was a political shotgun that killed this,” Azzolino said. “It had nothing to with the quality of the bill. It’s sad we didn’t get it through, but those requirements are still in the CPUC law. As soon as they come back in January, they will restructure this and have the GCLA behind it. It will have additional requirements to benefit us.”

The fact that the GCLA gets a strong second chance with AB612 is a positive development, Azzolino said. “But it’s going to take all the limo companies in California to make calls to Assembly and Congressional representatives. It will take more time and money with our lobbyists, and we as an industry have to get behind all of that. If you don’t pony up now and make the calls and write the letters, it’s not going to happen. It requires all our backing and efforts. We have the ability to do it because they [legislators] understand our industry is legitimate and we are not hiding behind anything.”

Next California limousine industry event and legislative update: GCLA EXPO AND TRADE SHOW SEPT. 23

Related Topics: California operators, Greater California Livery Association, Gregg Cook, legislation, lobbying, Lyft, regulatory enforcement, state regulations, TNCs, Uber, vehicle apps

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