Photo: Eileen Escarda
Uber and Lyft test vehicle-for-hire regulations across Florida.
The disruptive technology of ride services Lyft and Uber is meeting the immovable force of vehicle-for-hire regulations in cities throughout Florida. Guess who's winning.
Broward County didn't last long against vehicle-for-hire service Uber. When Uber and a similar company called Lyft entered the Fort Lauderdale market in 2014, the county saw them as illegal taxi services, considered seeking a court injunction to shut them down, wrote a "cease-and-desist" letter and cited their drivers by the hundreds for breaking the law.
But pressure from constituents and the companies led county commissioners to invite the companies to help review regulations on vehicles for hire. In April, the county backed off two crucial regulations to which Uber objected — limits on the number of cars and county-regulated rates — for Uber, Lyft and other "transportation network companies." The least the companies could do, the county's commissioners decided, was to pay to register with the county, get drivers commercial insurance and have vehicles inspected by a licensed mechanic. Their drivers, like cabbies, would need county chauffeur registrations and undergo fingerprint background checks against state and federal databases.
Uber and Lyft decided even those requirements were too burdensome. Uber objected in particular to fingerprinting and individual driver registrations. In late July, after the county upped the penalties for violations, the two pulled out of the market, to widespread outcry — against the county's commissioners.
Broward gave Uber "everything," laments Broward Commissioner Dale Holness, Uber's strongest antagonist on the board. "They have a good, skillful PR machine, and they used it to run over us."
In September, commissioners surrendered and amended county law to Uber's liking.
Getting run over has become a common experience in Florida for cab and limo companies and the politicians who regulate them. Uber gets its way by leveraging its popularity — and simply ignoring local laws.
Vehicle-for-hire regulations date back to when horses provided horsepower. The laws have grown into a thicket of local rules meant to protect the public but which also protect the industry. Specifics vary by locality but, in general, local governments control what drivers charge and mandate handicapped accessibility, 24-hour service, certification of meters, vehicle inspections, vehicle signage, acceptance of all forms of payment and prohibitions on red-lining, that is, refusing service to certain passengers or neighborhoods.
In return for those mandates, most localities limit the number of cabs that can operate, controlling supply to the benefit of operating companies.
San Francisco-based Uber, founded in 2009 and now valued at $50 billion, and Lyft, founded in 2012, have upended that status quo. People sign up to be drivers with a minimum of fuss, using their personal vehicles to transport passengers. Uber views them as independent contractors, not employees.
John Camillo, president of Yellow Cab of Broward County, says cabbies have been hit hard by competition from the ride-sharing services.
The drivers use smart phones to connect to the network that delivers the customers via an app. Customers know how much they'll pay before they summon a car and pay by credit card, which they register in the course of downloading the app. After a ride, passengers rate drivers and vice versa.
Since Uber and Lyft ignore regulations on pricing, they're able to undercut the regulated vehicle-forhire companies and also can jack up prices at peak demand times.
The popularity of Uber and similar services has made them a kind of must-have amenity for communities looking to appeal to millennials and forward-thinkers of any age. At a Broward commission meeting in January, Emilie Shaw, widow of longtime southeast Florida congressman and former Fort Lauderdale Mayor Clay Shaw, joined dozens advocating for Uber. She gave an emotional plea tied to the driver who returned a wallet she left behind in his car.
In its first year in Florida, Uber says its 20,000 drivers provided 8 million rides and earned more than $90 million. A lot of it came out of cabbies' wallets. Yellow Cab drivers in Broward, who like Uber and Lyft drivers are independent contractors, lost 13% in revenue year-over-year compared to the first six months of 2014, says John Camillo, president of Yellow Cab of Broward County.
The problem, from the local regulator and vehicle-for-hire industry point of view — not just in Florida but nationally — is that the Ubers and Lyfts can price so competitively because they don't bear the regulatory costs the rest of the industry must shoulder.
Airports, for example, mandate that cabs pay a fee for the privilege of picking up customers. Transport company Mears in central Florida annually pays $1 million to Orlando International Airport, says Roger Chapin, Mears vice president and a board member of the Florida Taxicab Association. The Greater Orlando Aviation Authority sued Uber over drivers failing to pay the requisite $50 charge to work the airport and $2.65 per fare and $3.15 fee per half-hour for waiting for customers.
The authority won a temporary injunction preventing Uber drivers from picking up at the airport. The suit and settlement talks were ongoing as of early September.
On and off airports, Uber drivers have been cited thousands of times from Panama City in the Panhandle to Key West and beyond. (Drivers in Hong Kong have been arrested for not having proper insurance. At one protest, French cabbies burned an Uber driver's car.)
The taxi industry has sought to frame the debate around public safety and accountability rather than fares. Chapin says he's given up trying to hold the Ubers to government-regulated pricing. "I think the PR argument about telling them what they can charge is a loser," he says.
Instead, the industry catalogs Uber drivers with criminal pasts and highlights horror stories, including the Uber driver in South Carolina alleged to have sexually assaulted a passenger and the Miami driver arrested by the FBI as an alleged "lone wolf" for ISIS. Nationally, the industry created a website that tracks misdeeds by Uber/Lyft drivers.
There also have been complaints about fares. An Uber customer in Jacksonville, after the Georgia-Florida game, mistook an Uber price change during peak demand for percentage increase in the base fare when it was in fact a multiple of the base fare. He found himself charged $417.11 for a 32-mile ride. (Uber refunded part of the fare.)
The Florida Taxicab Association put out poll results showing Uber's reliance on smart phones and credit cards eliminated about half the public from using the service, disproportionately affecting low-income people, the elderly, Hispanics and African-Americans. Since personal auto insurance doesn't cover using one's vehicle for hire, Uber drivers are routinely without coverage and, if there's a loan on their vehicle, also probably are violating their car loan agreement, Chapin says.
Supporters of Uber and the new players counter with their own tales of lousy or non-existent taxi service, dirty cabs and sour and inept drivers, some with their own criminal pasts. They say the newcomers are sufficiently insured, get cars off the road, keep people from driving drunk and save consumers money and hassle. Operating on a different model, the new companies say, means they require different regulations and aren't subject to existing rules — "regulatory disruption," Uber CEO Travis Kalanick has called it.
The regulatory landscape certainly has been disrupted, with sometimes puzzling outcomes.
Uber didn't pull out of Orlando, as it did in Broward, but Orlando requires a minimum fare — the only transportation network company law in the country to do so, Uber says — while Broward doesn't.
The new players say regulations often are too onerous. Lyft spokeswoman Chelsea Wilson says most Lyft drivers generally work fewer than 20 hours per week. An operator's permit — like those required of taxi drivers — can be an outsized burden for a part-timer to pay, and people shouldn't have to take time off their full-time jobs to go to a government office for licensing and fingerprinting, she says. Lyft insures drivers, she says, and conducts as good or better background checks as fingerprint-level checks.
Even as they've ignored local rules, the new companies have tried to tilt state law in their favor. "Their game plan is to fight this in Tallahassee," says Hillsborough Commissioner Victor Crist, who chairs the county's Public Transportation Commission.
The companies failed the last two years, but Uber lobbyist Brian Ballard says that given the "overwhelmingly negative" reaction to the Uber/ Lyft withdrawal from Broward, Uber will try again. "Every day you see the local governments having their ups and downs is making our case for us," Ballard says.
Efforts to obtain comment directly from Uber weren't successful. An open letter from Uber asking state leaders to take up legislation was signed by the Florida Chamber of Commerce, Associated Industries of Florida, the National Federation of Independent Businesses Florida and Mothers Against Drunk Driving. Florida Chamber Executive Vice President David Hart says it's "easy" to support Uber's and Lyft's desire for a common regulatory standard rather than having to battle over hundreds of jurisdictions. He says Florida relies heavily on tourists and business visitors who are accustomed to using transportation network companies in other markets.
Brewster Bevis, Associated Industries' senior vice president of state and federal affairs, says AIF supports Uber and Lyft "because they represent a free-market approach that provides options to the rider."
Senate Transportation Committee Chair Jeff Brandes (R-St. Petersburg) says the state should pre-empt local regulators that he says stand between customers who want lower rates and better service and drivers who want to provide them. For some, "this is a litmus test for crony capitalism," he says.
Senate President Andy Gardiner (R-Orlando), has opposed the Uber legislation. Efforts to obtain comment from him weren't successful.
As Uber and Lyft get regulations eased, the existing industry has found local elected bodies sympathetic to their own calls for lighter regulations to help them compete against the new ride providers. Miami-Dade, for one, is considering loosening regulation of the taxi industry. And established Florida companies won't be shy about copying any innovation that helps them. Indeed, Yellow Cab's Camillo says his company's ride-ordering app predates Uber.
Meanwhile, local governments that resist Uber likely face the same pressure faced by commissioners in Broward, who got thousands of complaints from constituents after Uber and Lyft left. In a full-page newspaper ad paid for by Uber, eight pro-Uber local mayors called on the county to reconsider its mandates.
In September, a majority of commissioners decided to see things Uber's way.
Miami - Dade - Uber, Lyft and similar companies aren't legal in Miami-Dade, but proposed ordinances would allow them. From May 2014 through July 31 of this year, Uber drivers have been cited 2,599 times by the county; Lyft drivers have been cited 125.
• Broward - County commissioners retreated on trying to hold Uber to standards commissioners said were necessary for public safety. Commissioners instead let the companies largely self-regulate. The county also gave up on an insurance requirement for drivers.
• Palm Beach — Under pressure from a threatened pullout by Uber, Palm Beach commissioners in August decided to delay requiring fingerprint background checks and commercial driver insurance requirements. Commissioners were scheduled in September to take regulation of Uber and its peers up again.
• Orlando — The county requires a $250 permit, background checks, vehicle inspections, insurance and a minimum fare of $2.40 per mile. The companies aren't complying and remain in the market.
• St. Petersburg — Uber and other transportation network companies in St. Petersburg are operating illegally. The mayor and city council have been working on an ordinance that would allow them to operate legally, protect the public and allow the taxi industry to compete.
• Hillsborough — Hillsborough requires vehicle inspections, a Level II background check, auto insurance for business use and ADA accessibility, which can be contracted out to a second-party vendor. Uber and Lyft aren't complying but remain in the market.
• Jacksonville — The city requires Uber and similar companies to obtain permits for drivers, have insurance, register with the city and have vehicles undergo inspections by the city. Background checks don't require fingerprinting. The city is both considering tightening penalties for drivers of unregistered vehicles and creating new rules for Uber and similar companies.
Contractors or Employees?
Uber and Lyft are winning the regulatory battle in Florida over how they and their drivers operate but lost an important early round in how they are structured. A Florida Uber driver injured in an accident — his car also was damaged — couldn't get compensation he wanted from Uber and filed for unemployment. The state Department of Revenue deemed him an employee, rather than an independent contractor as Uber said he was. Several layers of appeal are open to Uber, and Florida is only one state, but if transportation network company drivers end up classified as employees and not independent contractors, it would have a major impact on them.
Victor Crist, Hillsborough County commissioner and chair of the state-created Public Transportation Committee for Hillsborough County, says companies like Uber are getting pushback from local authorities because they don't want to operate legally. Their model, he says, is to operate inexpensively, flood the market with drivers, undercut companies operating legally, seize market share and then once established as the company of choice, agree to comply and raise rates. "Everywhere they've become legal," he says, "eventually once they stole twothirds market share, they became legal and started to agree with the policies."
Florida health coverage rate is better but still lags most of the U.S.
Numerous Florida college rankings drop under new U.S. News methodology