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New CA Regulations Improve Safety of Rideshare Companies

The California Public Utilities Commission unanimously approved new regulations affecting rideshare companies like Lyft, SideCar, InstantCab, and UberX. These companies, now referred to as “transportation network companies” or “TNCs” are now legal in California. These regulations are the first of its kind.

Previously, many transportation companies protested these rideshare operations, claiming that they are not subject to the same rules and regulations as traditional methods of paid private transportation. For example, San Francisco taxi drivers must obtain a medallion, which are limited in number. Additionally, taxi drivers must pay for a specific insurance policy priced at $8,500 each year. TNCs are not subject to these certifications and do not have to purchase that specific insurance policy.

A TNC is defined as an organization “that provides prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.” These TNCs have evolved faster than existing transportation regulations, which made the drivers feel like they were “rogue” drivers. The PUC previously sent cease and desist letters and fined these companies for illegally operating a commercial transportation business.

The new regulations center on public safety. TNCs are now required to obtain a license from the California Public Utilities Commission, institute a driver training program, institute a zero-tolerance policy on drugs and alcohol, and hold a commercial insurance policy with a minimum of $1 million per-incident coverage. Also, a criminal background check must be made for each applicant in a national database, including the national sex offender database. The check needs to be made with the applicant’s social security number, not just the applicant's name. Any felony conviction for violent crime, a sexual offense, a crime involving property damage, and/or theft will deem the applicant ineligible to be a TNC driver. The PUC is also authorized to conduct inspections and investigations of TNCs.

In one year, the California Public Utilities Commission will hold a workshop to review the rules. Additionally, the TNCs must produce an annual report detailing which rides they accept and decline, all accidents and whether they are equipped to serve disabled passengers.

Read the full text of the CPUC’s Order Instituting Rulemaking and the Decision Adopting Rules and Regulations to Protect Public Safety While Allowing New Entrants to the Transportation Industry.

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