Do you remember when you downloaded an App for one of these companies, used it (one of my parents just did on a trip to D.C.), and loved it? Saw who was coming to pick you up? What he or she was driving, her name, and followed the progress en route to your location? C’mon, who doesn’t love that? I do still grumble at the jargon that has crept up around the “gig economy” companies like Uber and Lyft. There is the business savvy notion that they are “market disruptors,” and I suppose they are. Although I haven’t decided whether I think there is intrinsic value in mere disruption. Then there is the inane idea that they provide “ride sharing” and that they are part of the “sharing” economy. Nope. Customers don’t share destinations with their drivers. Transportation analysts prefer “ride sourcing.”
The term that I think has stuck is, “transportation network company,” which the Virginia Department of Motor Vehicles defines as “a company that provides prearranged rides for compensation using a digital platform that connects passengers with drivers using a personal vehicle.” Virginia Department of Motor Vehicles, Transportation Network Companies Frequently Asked Questions. In theory, just whose personal vehicle, whether the driver or passenger, does not matter, because there are ride sourcing services that match drivers who drive the customers’ cars for them. What a concept: A guy or gal who shows up and drives your car where you want to go. I drive a twenty-year-old restored Toyota Tacoma with a manual five speed and a beefy truck clutch. Imagine the panic when my hired driver arrives for some embarrassing on the job training with a manual transmission and a disapproving customer.
And who’s picking you up anyway? An employee of the company? Or some freelance driver who has another job at Staples? And do you care? Well, it could matter, because if the driver assaults you, or causes you injury by her or his own negligence or gross negligence, you have claims against the company if the driver is an employee, but not if the driver is an independent contractor. It might be hard to collect on a claim against someone stitching together a couple of low wage jobs in this “sharing,” part-time, sort of anemic economy. And in all seriousness, there are larger policy questions whether a workforce ought to be employed rather than freelancing.
The driver’s use of his or her own vehicle, rather than the company’s, to perform the work is strong indicia that a worker who drives is an independent contractor, not an employee. But of course, that is only one factor. The typical transportation network company (TNC) model seeks to classify the driver as an independent contractor. It’s more cost-effective for the company and permits it to charge lower fares. But there have been legal challenges to the status of these workers that could upset the model and make them less attractive to consumers.
A new Florida law seeks to establish a “bright line” test under state law for TNCs when they comply with the following criteria:
- The TNC does not prescribe specific hours for the drivers to be logged into the TNC’s digital network,
- The TNC does not prohibit drivers from using digital networks from other TNCs
- The TNC does not prohibit drivers engaging in other businesses, and
- The TNC agrees with drivers, in writing, that they are independent contractors
These requirements seek to negate the traditional “control” factors that are common to most legal tests of a worker’s status. For example, employees typically have set hours they must be on the job, whereas contractors may come and go, or be available, when it suits them. And permitting drivers to work for competitors goes a long way toward establishing their genuine independence. What could be more independent than freelancing in an industry?
In addition to the independent contractor provisions, the Florida law sets forth requirements for fare transparency, background checks and substance abuse policies for TNC drivers, and automobile insurance coverage, among other provisions. But background checks and substance abuse policies will be seen as evidence of “control,” for purposes of federal law, which the Florida law expressly provides it will not control in litigation over worker status.
As consumers, we like TNCs. Whether your driver is an independent contractor or an employee may not seem like a big deal when you select “Jay” driving a Nissan Altima who is five minutes away. But the legal issues and policy questions are going to take some time to sort out. In the meantime, do be sure to rate your trip at the end. After all, it’s part of how they are disrupting the market.