RALEIGH — Frustrated by their lack of authority to police upstart businesses in the “sharing economy” — a marketplace relying on direct negotiations between providers and consumers — some North Carolina municipalities are asking the General Assembly for permission to regulate businesses such as Uber, Lyft, and Airbnb.
Uber and Lyft are smart phone app-based ride-sharing services that have begun operating in a handful of North Carolina cities. Airbnb is an online service that allows people to rent a room, apartment, or house from the owner, bypassing real estate brokers or apartment management companies.
A Charlotte municipal official as well as competitors of sharing economy businesses approached the General Assembly’s Revenue Laws Study Committee in November, asking lawmakers to authorize more regulations on these businesses. The committee meets when the General Assembly is out of session to recommend changes in the state’s tax code.
Thomas Powers, an assistant city attorney for Charlotte, said the city’s sole concern is public safety.
“We’re not getting into the actual issues of competition between Uber and Lyft, as well as other taxicabs and black cars [limousine services],” Powers said. “Instead, our concern is solely about the passenger [who] is riding in the vehicle and whether or not the service that’s being provided to them through any means of passenger vehicle for hire is the safest service for the citizens of our community.”
Powers said he had anecdotal reports that some regulated taxi companies are claiming that their drivers should face regulations no more stringent than those controlling the ride-sharing services. He also noted that vehicles used by regulated taxi and other livery services must undergo more thorough vehicle-safety inspections than cars owned by drivers who provide transportation for ride-sharing services.
Representatives from both Lyft and Uber said drivers who partner with them go through complete background checks.
“There’s a thorough process that we go through to screen all of our drivers,” said April Mims, public policy manager with Lyft. Drivers undergo a thorough background check and wouldn’t be allowed to have a violent offense or sex offense. They wouldn’t be allowed to have had a DWI or drug-related offense in the past seven years, or a moving violation in the last three years, she said.
“We want to make sure that every single person on the road is safe and trusted,” said Rachel Holt, regional general manager for Uber on the East Coast. “This includes extremely stringent background checks.” She said Uber’s background checks pick up on things that typical background checks used by the taxi and limo industry don’t. All cars have to meet their annual state safety inspection, she said.
Competitors also urged more regulation of the upstart sharing-economy industries.
Michael Solomon of Taxi Taxi said the same regulations that apply to taxis also should apply to ride-sharing services.
“We believe that the for-hire vehicle and the for-hire driver should at all times meet the safety requirements of the current code, including licensing, background checks, vehicle inspections, commercial tags, and commercial insurance,” Solomon said. “Any person who collects a passenger for a fee no matter how it’s collected should be held to the same standard as the current code requires.”
At a minimum, all vehicles for hire should be required to register as a commercial vehicle and obtain a commercial license plate, Solomon said.
Lynn Minges, president of the N.C. Restaurant and Lodging Association, said that some of the sharing economy lodging businesses are skirting regulations intended to protect public safety.
Partners with targeted companies, however, asked lawmakers not to overregulate their industry.
Katherine Parsons of Wake County, a driver for Lyft and an Airbnb host, said the two ventures help her earn a few dollars to supplement her family’s income.
“I’m a part-time driver; I might drive two hours a week,” Parsons said. “If you overlegislate this, if you make it difficult for me to do this kind of thing, if you make it expensive … I just won’t do it.”
Said David Hippensteel, an Uber driver, state employee, and U.S. Navy veteran, “If you want to regulate me, you need to regulate family and friends as well. What Uber and Lyft does is no different than if I had 50 friends that at any given time would call me up and say, ‘Hey, can I get a ride someplace. And at the end of that ride, they’d say, hey, here’s $10 or $15 for gas.’”
Sen. Bill Rabon, R-Brunswick, who co-chairs the committee, said the primary interest of the committee was to make sure drivers and those renting their residences were paying the appropriate taxes. Legislative staff and industry officials assured Rabon that companies are issuing federal 1099 tax forms.
The committee took no action and made no recommendations.
Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.