Legislature(2017 - 2018)BARNES 124
03/10/2017 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB2 | |
| HB108 | |
| HB141 | |
| HB132 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 132 | TELECONFERENCED | |
| += | SB 14 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 2 | TELECONFERENCED | |
| += | HB 108 | TELECONFERENCED | |
| += | HB 141 | TELECONFERENCED | |
HB 132-TRANSPORTATION NETWORK COMPANIES
4:01:00 PM
CHAIR KITO announced that the final order of business would be
HOUSE BILL NO. 132, "An Act relating to transportation network
companies and transportation network company drivers."
4:01:26 PM
REPRESENTATIVE WOOL, as prime sponsor, presented HB 132 and
described the bill as timely after passing HB 108 out of
committee today wherein the members agreed it is time to get
onboard with the modernization of society. He explained that
"ridesharing" is a platform used to obtain a ride somewhere
through an application (app) on a smart phone and passengers
hire private individuals to drive them from point A to point B.
Other aspects of society have modernized due to digital
technology, which includes: Airbnb is accessed through a smart
phone and people pay the homeowner to stay in their home for a
certain amount of time for a certain amount of money; Car2go
parks cars in different areas and with the appropriate card a
person is able to get into that car, drive it around, park it
later, and not go to a typical car rental counter; traveling is
conducted online; and ridesharing. Ridesharing companies can
include: Uber, Lyft, Side Car Rentals, Car Rental at Geraldton
(GET), and many more with different specialties. He pointed out
that these drivers are independent contractors and do not
receive worker benefits, similar to taxi cab drivers.
Ridesharing is available in 49 states, 20,000 people in Alaska
have the Uber app on their phone, and 60,000 people coming into
Alaska last year attempted to open their app.
4:05:23 PM
REPRESENTATIVE WOOL advised that the upside is that
transportation network companies (TNCs) will help the economy,
as follows: it will provide more income to people looking to
supplement their income; it is one of the few jobs the military
can be involved in during their off-time; it stimulates the
economy especially in downtown areas; it is good for public
safety because less people are driving under the influence; and
people are more prone to go out and spend money. He described
as follows: it is better service than conventional taxis and
studies have shown that where ridesharing has come in, more
people are taking rides and more areas are served because
drivers tend to drive where they live; ridesharing is generally
50 percent less than conventional taxis; ridesharing is
convenient and easy because the app is used rather than a phone
call. He explained that combined with ridesharing are other
products, such as a parent app wherein the parents enable their
children to get a ride and the children can be tracked.
4:07:29 PM
REPRESENTATIVE WOOL advised that carpooling is convenient with
the ridesharing app because a person can opt to share the ride
with another individual so both rates go down, and it is good
for the elderly or disabled individuals who may not be able to
handle money because it is set up on a person's individual phone
and cash is not involved. The purpose of this is not in any
manner to end taxi cabs, he stressed, having transportation
network companies (TNCs) in an area will increase paid riders
and it actually augments taxis cabs. Currently, he offered,
many taxis cabs are adapting and using similar apps with the
same technology as ridesharing, and possibly taxi cabs will
specialize and perform certain types of rides. He added that
taxi cabs can still be hailed which cannot happen with TNCs, and
taxi cabs will always be needed. He described that TNCs are in
every other state in the country, and this is part of the
evolution of technology and modernization of society.
4:09:29 PM
REPRESENTATIVE BIRCH commented that this legislation is well-
timed and from a security standpoint, the traveler is able to
see the driver, when they will be picked up, and so forth.
Pushback in some circles has been the quality of the ride,
security, and timeliness, he said.
4:10:17 PM
REPRESENTATIVE KNOPP referred to the comment that TNCs existed
in Anchorage, and asked why it was no longer available. He also
asked why legislation is needed at the state level to allow
TNCs.
REPRESENTATIVE WOOL said he does not live in Anchorage and he
read in the newspaper that [Uber] came in as a trial project
with the Municipality of Anchorage, which has a regulated taxis
cab system, and Anchorage tried it out as a pilot project. As
far as the statewide legislation, he noted, there is statewide
legislation in 38 states and Wyoming just passed the legislation
a week or so ago. He opined that Washington State just passed a
version on their Senate side and, hopefully, it is about to pass
the legislature. He related that it is just too hard for the
ridesharing companies to have different rules and regulations in
every single municipality; therefore, a uniform system
throughout the state was preferred.
4:12:26 PM
LAURA STIDOLPH, Staff, Representative Adam Wool, Alaska State
Legislature, advised that when Uber had the pilot program in
Anchorage, it was operating without an exemption from the Alaska
Workers' Compensation Act, and this legislation takes care of
that issue.
REPRESENTATIVE KNOPP asked if the issue at that time was whether
TNC drivers were independent contractors or employees.
MS. STIDOLPH answered yes, and she said this bill clarifies that
they are independent contractors exempt from the Alaska Workers'
Compensation Act, much like taxi cab drivers.
4:13:15 PM
REPRESENTATIVE KNOPP asked whether taxi cabs are regulated at
the state or local level.
MS. STIDOLPH replied that taxi cabs are municipally regulated in
Anchorage and "they do have harder regulation there." She said
that there is some regulation in Juneau and Fairbanks, but not
as much as in Anchorage where there are medallions. A state
policy rather than municipal policy is necessary because the new
technology requires a clear set of rules that is not patch
worked around the state. She explained that TNC drivers cross
municipal borders from community to community and multiple
municipal regulations could cause problems.
REPRESENTATIVE KNOPP asked how to level the playing field, how
would the committee allow municipalities to not regulate one
travel group and regulate the other group. He said he likes the
bill and would like to see TNCs here, but only on a level
playing field.
MS. STIDOLPH advised that Anchorage is de-regulating its taxi
cab system in five years and this bill aims to state regulate.
In a year or two, if municipalities are "having that much of a
problem with TNCs then we can go back into statute and perhaps
change it," she said.
4:15:22 PM
REPRESENTATIVE JOSEPHSON surmised that part of the hope is to
have a system that mirrors a taxi cab system, in the respect of
not being an employee but rather self-employed. The
Municipality of Anchorage, for example, requires that taxi cabs
have a $100,000 per person bodily injury coverage, $300,000
aggregate, and $50,000 per occurrence. He referred to HB 132,
page 6, lines 7-8, wherein "there is an opportunity where a
person could be not on a prearranged ride but sort of in a
position, I guess psychologically or physically, to take a
prearranged ride." He asked whether the insurance rates, given
that this is a form of commercial carry, shouldn't be somewhat
higher than is indicated on page 6, lines 9-11.
4:16:43 PM
REPRESENTATIVE WOOL opined that Representative Josephson was
referring to the different periods of the status of a driver for
a TNC, such as period 1, period 2, period 3. Period 1, he
explained, means the driver has the app on their phone open and
they can be in their car, parked in the parking lot, driving, or
at their house. Period 2, he explained, is when someone
requests a ride and the driver accepts the ride. At that point
the coverage goes up to $1 million liability and $1 million
insured/under-insured motorists, which is considerably higher
than the requirement for a taxi cab in Alaska. Period 3, he
explained, is when the passenger gets into the car and the car
is still covered at the $1 million level. Any driver for a TNC
company must have their own valid and verified insurance, and if
the driver loses their insurance for some reason, they lose
their driving privileges with the TNC. That being said, he
commented, the TNC will provide, if needed, the state minimum
requirement for all drivers in the State of Alaska.
4:19:25 PM
REPRESENTATIVE JOSEPHSON asked why TNCs would purchase insurance
for people who are not their employees.
REPRESENTATIVE WOOL responded that the contracted drivers must
purchase their own insurance, the TNCs have a policy above and
beyond the driver's insurance, especially in periods 2-3.
Drivers must meet the state insurance minimum but some may
purchase in excess of that requirement, and insurance companies
offer a product specifically for TNC drivers. He said that Ms.
Stidolph received a letter from her insurance company inquiring
as to whether she was a TNC driver, and if so, it would charge
an extra of $5 - $8 per month. He opined that TNCs buy the
insurance for extra protection in the event extra insurance is
necessary.
4:20:48 PM
REPRESENTATIVE JOSEPHSON commented that it is curious that TNCs
would afford this benefits to someone they want to be detached
from. He asked whether there are regulations in other states
allowing the drivers to organize, and whether the TNCs have
essentially tolerated that sort of regulation and worked
consistent with the regulation.
REPRESENTATIVE WOOL, in response to Representative Josephson's
first question, advised that taxi cab companies also buy
insurance for their independent contractor drivers. He opined
that the City of Seattle passed an ordinance allowing drivers to
organize and he does not believe they have yet organized. A
sub-group of drivers in New York City, Uber Black for example,
are employees of a separate company that uses the Uber platform
so they may be organized in a different manner. Technically, he
said, they are employees of a different company and are more
professional drivers.
4:22:40 PM
CHAIR KITO surmised that Uber Black is not your grandparent's
Uber.
REPRESENTATIVE WOOL agreed, and he said that only a small
percentage of the drivers in Seattle actually want to organize.
An issue about organizing these drivers is that many are part-
time, and as far as all of the issues that go into organizing
employees, such as sick time and vacation time, which is usually
ascribed to full-time employment. He opined that there are not
any organized TNC drivers, but representatives from the
companies can validate his statement.
4:23:37 PM
CHAIR KITO opened invited testimony and advised that public
testimony would not be taken today.
4:23:53 PM
ANNABEL CHANG, Director of Public Policy, Lyft, offered support
for the legislation and explained that the Lyft ridesharing app
technology connects people with efficient and safe rides by
downloading, and registering the app on a person's smart phone,
and requesting a ride with the tap of a button. She said that
Lyft utilizes technology to provide consumers with new levels of
transparency and accountability. Every Lyft ride is tracked via
GPS, she explained, and once the app is open, passengers are
provided with the driver's picture, user ratings of the driver,
the license plate, make and model of the vehicle, and passengers
can track the car; the drivers receive a photo and the name of
their passenger. She remarked that there is a function in the
app where an ETA can be sent to the passenger, and the passenger
can send an ETA to their family or colleagues in a business
meeting. Payments through Lyft are entirely digital, thereby
enhancing security; every passenger automatically receives a
digital receipt with the information of their driver, and no
cash changes hands. Subsequently, she said, every passenger and
driver have, the opportunity to rate each other, and after every
ride there is instantaneous feedback. Lyft is more than simply
a ridesharing app because it offers unique and flexible economic
opportunities, such that, in 2016 drivers on the Lyft platform
earned $1.5 billion and over $150 million in tips, and Lyft
passengers increased their consumer spending by $750 million in
one year. Currently, 39 states across the nation have passed
comprehensive statewide legislation to regulate Lyft in a safe
and robust manner, almost identical to HB 132. Lyft hopes that
Alaska will join that effort and requests the committee's
support for HB 132, she said.
4:27:49 PM
MITCHEL MATTHEWS, Senior Northwest Operations Manager, Uber
Technologies, offered support for the legislation and the
opportunity to return its flagship product back to Alaska. He
explained that over 20,000 Alaskans currently have the Uber app
downloaded on their smart phone, and in 2016, 60,000 individuals
opened that app seeking a ride using the Uber platform, be it
tourists, residents, or visitors to the state. This legislation
provides appropriate safeguards for consumers and a clear,
precise, and predictable operational framework for transport
network company (TNC) drivers and riders across the State of
Alaska. The legislation contains an insurance model that has
been adopted in essentially the same form in over 40 states, and
that language has the support of the largest property and
casualty insurance trade groups in the United States. Further,
he said, this bill provides a clear framework to ensure public
safety because it creates a certainty to conduct business
without the need to navigate a patchwork of local regulations
that may differ from city to city. It further enhances access
to transportation in and around rural communities as well as
creating new small businesses and an income stream for families
and individuals, he said.
4:29:23 PM
MR. MATTHEWS explained that residents in the Matanuska-Susitna
Valley who commute and travel from Anchorage would benefit from
the bill's clear and concise framework. Uber riders request a
ride with the touch of a button and after a trip match is made
between the rider and driver, the name, photograph, license
plate and contact details, which are anonymized, are shared
between each individual. During the ride a rider may share
their location and trip with their family members, thereby,
providing an enhanced safety feature, and there is an
accountability component wherein each rider and driver rate each
other through the app with direct feedback. Independent
contractors value the flexibly of Uber's model, and he said that
over 80 percent of the drivers drive less than 10 hours per week
because it allows drivers to work when they want for as long as
they want, drivers can work with competitors, and drivers can
drive in the area of their choice. He explained that Uber's
driver verification process includes an extensive screening
process for each applicant via a third-party approved by the
National Association of Background Check Screeners. The
screening process includes: social security numbers; driving
records; personal information - full name, date of birth, social
security number, valid driver's license, bank account
information, vehicle registration; and Uber does not allow
anyone on the National Sex Offender Public Website maintained by
the United States Department of Justice to drive for the
company.
4:31:31 PM
REPRESENTATIVE SULLIVAN-LEONARD asked whether a ridesharing
driver would be required to sign up through the City and Borough
of Juneau (CBJ) for a business license, background check, and
drug testing, and further asked whether the drivers would be
applicable for a sales tax application.
MR. MATTHEWS responded that the legislation itself provides
background check language and requirements so when an individual
signs up to drive with Uber, Lyft, or others, the third-party
the TNC works with would be responsible for conducting that
background check and adjudicating the information. He advised
that drivers are independent business owners and a business
license for Juneau, for example, would be the state business
license where they register their intent to operate in Juneau,
or a CBJ business license would be theirs to obtain.
REPRESENTATIVE SULLIVAN-LEONARD surmised that the drivers would
have to follow the rules as to sales tax, collections, and
payment to the CJB.
MR. MATTHEWS opined that the bill sponsor is crafting language
with respect to sales tax.
4:33:29 PM
CHAIR KITO requested Mr. Matthews to describe the vehicle
inspection requirements for a driver, and how the requirements
might be accomplished in an area without a mechanic, for
example.
MR. MATTHEWS answered that Uber requires a 19-point vehicle
inspection to ensure that the vehicles are mechanically able to
provide a service, and "we would review it again. In areas of
Alaska, as takes place in areas of Montana, Uber may require
individuals signing up to take photographs or videos of their
vehicles, Uber would then have the photographs and videos
reviewed by an individual who would ensure that the vehicle does
meet the requirements to drive and pass an inspection. The
statewide framework is important, he described, because it
allows a person who signs up in a community without a mechanic
the opportunity to drive.
4:34:49 PM
REPRESENTATIVE JOSEPHSON surmised that the TNCs have a means in
other jurisdictions to pay a sales tax.
MR. MATTHEWS related that in some jurisdictions there would be
no taxes levied against the TNC, and a state sales tax exists in
other areas of the state. He deferred to the bill sponsor for
clarity.
REPRESENTATIVE JOSEPHSON asked what percentage of people
screened for background checks that are rejected.
MR. MATTHEWS advised that he does not have data on that issue.
The requirements listed in the bill, he explained, are the
requirements people would be adjudicated against, the
determining factor as to whether a person could drive on the
Uber platform.
REPRESENTATIVE JOSEPHSON referred to personal insurance policies
and the insurance policies provided by the TNC, and asked
whether both policies would cover an accident. He further asked
which insurance policy would take priority.
MR. MATHEWS deferred to Jared Eber.
4:36:45 PM
JARED EBER, Attorney, Uber Technologies, explained that
individual drivers purchase specific insurance through carriers
offering a ridesharing product, and in addition, TNCs are
required to have their own insurance as well. The driver's
specific ridesharing insurance policy would respond first, and
Uber's insurance policy would respond on top of that for any
additional amounts the driver's specific ridesharing insurance
would not cover, he explained. The TNCs coverage would be
primary in the event the driver's insurance did not provide
coverage, he said, and would start at dollar one.
4:38:27 PM
REPRESENTATIVE KNOPP noted that the drivers would be independent
contractors and would go to the Division of Licensing for
business licenses, and asked how many applications
Representative Wool expected to be submitted.
REPRESENTATIVE WOOL said he was unaware of the projection for
the number of TNC drivers, but there were 80 drivers in the
pilot program in Anchorage.
REPRESENTATIVE KNOPP offered that the Division of Licensing
would be substantially busy with the licensing of these
independent contractors. He then reiterated concern regarding
little to no local control, and asked whether, when complaints
are filed, the person would most likely call the local police or
someone at the state level. He asked how the complaints would
be addressed, especially when the local municipalities do not
have authority to regulate and yet get stuck handling some of
the complaint calls.
REPRESENTATIVE WOOL answered that there had not yet been a
discussion regarding an abundance of complaints. He referred to
the local control issue and said that Anchorage has a medallion
system which will expire. He commented that he was unsure
whether the Anchorage control system was working well and that
he assumed those working with the control system possibly would
prefer to be out of the taxi cab business.
REPRESENTATIVE KNOPP explained that he was just putting his
thoughts out there for future conversations. He referred to the
Kenai Peninsula Borough's sales tax and commented that the Kenai
Peninsula Borough "does not do business licensing," but the
drivers would still be required to register and collect a sales
tax as independent contractors. He said that he assumed under
this bill there is no exemption.
REPRESENTATIVE WOOL related that the language is currently being
crafted incorporating local municipal sales tax in a form that
the driver will pay to the municipality.
4:41:50 PM
REPRESENTATIVE BIRCH offered his understanding that if there is
a complaint with a driver or any issue, it is loaded up
immediately and is shared to whoever is handling that ride
distribution. He opined that it is a two-way street and if a
passenger is overly drunk, the driver has protections in that
"they can basically measure up the potential cab ride as well."
4:42:46 PM
REPRESENTATIVE WOOL explained that the rating is mandatory and
before a person's next ride, they have to rate [the last ride].
He said that the ratings and comments are taken seriously for
the driver and the passenger, and if someone receives bad
ratings "they take them off the system" for drivers and
passengers.
REPRESENTATIVE BIRCH surmised that from a business standpoint,
there is always accountability through the business model.
REPRESENTATIVE WOOL agreed, and he said that he was unaware how
often complaints go to the local or state government level, as
mostly they are handled internally.
4:44:18 PM
CHAIR KITO commented that society will see an adaptation for any
of these types of new technologies coming forward.
[HB 132 was held over.]