Bowie was surprised when Lyft told her recently that she might have to pay for a business license to drive in each one of them. If that happened, Bowie said, she would stop working for the companies.
“I drive to pay for my Harley,” Bowie, 50, said, “not extra fees for business licenses.”
Lyft and Uber are trying to prevent Bowie and their thousands of other drivers across California from needing multiple licenses. A bill in the California Legislature backed by the two companies would allow ride-hailing drivers to get a single license to work statewide rather than having to purchase one in every city they pick up, drop off or drive through.
For now, few cities are enforcing their current business license rules with Uber and Lyft drivers. But the state legislation would preempt their ability to do so, paining local governments who are opposed to the legislation. San Francisco, which already has a robust licensing effort, is particularly aggrieved.
The city has sent notices to nearly 60,000 people it believes have driven for Uber and Lyft there, and more than 19,000 have paid the annual fee — typically $91 — for a license. The program allows the city to track ride-hailing on San Francisco streets, providing the data for a recent report from the city’s transportation agency showing that thousands of drivers work in San Francisco every day. The new state legislation would do away with that, said Silvia Solis Shaw, the city’s lobbyist, at an Assembly committee hearing on the bill last month.
“We are overwhelmed with these vehicles,” Solis Shaw said. “To deal with the impacts on our city, that is why we have this business license in place.”
The question of whether Uber and Lyft drivers need business licenses at all is a consequence of their status under the law. For years, regulatory and courtroom battles have centered on whether drivers are employees of the companies or independent contractors, a distinction that has substantial implications for drivers’ pay, benefits, work rules and the companies’ bottom lines.
Generally, these decisions have defined drivers as independent contractors, giving them the same classification as freelance writers, private investigators and those who run errands for pay. Workers falling under this status often have to get licenses in every city where they do business.
Those rules don’t make sense for ride-hailing drivers who could traverse dozens of cities with their passengers, said state Sen. Steven Bradford (D-Gardena), the bill’s author.
“To continue with the same business model that we used 20 or 30 years ago does not apply today,” Bradford said in last month’s committee hearing.
Bradford’s bill would require drivers to get just one business license, issued in the city where they live. It also would restrict some public access to drivers’ addresses. Currently, cities often make such information about independent contractors — who might list business addresses or post office boxes on their license forms —available in online databases of business records.
The privacy provisions are the primary reason Bowie supports the bill. She spoke on its behalf at last month’s committee hearing after Lyft notified her and other drivers of the bill’s existence through its app.
“I’m a single woman, I own a home,” said Bowie, whose full-time job is with the state Department of Rehabilitation. “And I don’t want my home address published.”
More broadly, opponents of the legislation don’t believe lawmakers should be giving Uber and Lyft special rules that no other independent contractors receive, especially in ways detrimental to cities with the most drivers.
According to San Francisco’s data, more than 70% of Uber and Lyft drivers operating in the city don’t live there. Bradford’s bill would mean the city couldn’t collect money from them. Based on the number of existing licenses, the city makes about $1.7 million a year from driver business license fees and would lose all but about $500,000 of that amount.
“San Francisco is going to lose the ability to license significant activity in their own community,” said Dan Carrigg, legislative director for the League of California Cities, at last month’s hearing.
The city of Los Angeles does not issue business licenses, and instead requires companies and independent contractors to pay a tax. Lyft and Uber drivers, including those who pass through the city without stopping, are required to pay the minimum $55 a year, said Selwyn Hollins, an assistant director for the city of Los Angeles Office of Finance.
“The majority don’t,” Hollins said.
As it stands, Hollins said, Los Angeles could charge its tax even if Bradford’s bill passes. Currently, he said, the tax is paid on an honor system and the city, he said, has held talks with Uber about how to improve its system, including the company potentially notifying drivers of their obligation to pay.
The legislation, Senate Bill 182, is pending in the Assembly and needs full votes by both houses to pass by the end of the legislative year in mid-September.