Industry upset with ride-for-hire bill

Despite concerns raised by both taxi drivers and the newer app-based ride companies competing with them for passengers, the Massachusetts House on Wednesday overwhelmingly passed a bill establishing a regulatory structure for the ride-for-hire industry.

The legislation, which now moves to the Senate, creates a state division to oversee transportation network companies like Uber and Lyft, whose drivers would also undergo background checks that a main architect of the bill described as "one of the most comprehensive" in the country.

Rep. Aaron Michlewitz, a Boston Democrat who co-chairs the Financial Services Committee that drafted the bill, said on the House floor that the bill aims to balance the fostering of innovation with protecting public safety.

Michlewitz said he believed the legislation met that goal, though taxi drivers responded to the bill with concerns their industry was kept at a disadvantage, and ride-hailing companies said some of the measures would hurt their business.

"I hear from all sides. The TNCs aren't happy, the traditional cabs aren't happy; maybe that's a good thing. When nobody's happy at the end of the day it probably means it's a good bill," Rep. Michael Moran said. "We struck the right balance, no one gets everything and everything is done in a fair and even kind of way."

The bill passed on a 139 to 16 vote. Republican lawmakers, who number 34 in the House, were split on the bill and provided the only votes against the legislation.

A spokeswoman for Gov. Charlie Baker said the governor, who is vacationing in Utah with family, views the House's passage as "an important step toward protecting public safety while embracing innovation and economic growth."

Before passing the bill (H 4049), the House adopted a Rep. Mark Cusack amendment that would allow ride-for-hire drivers to continue to work during the time between the bill becoming law, if it does, and the new oversight division beginning to issue licenses.

"We are grateful for the efforts by the House of Representatives today on a complex piece of legislation," Uber's Boston General Manager Chris Taylor said in a statement. "The current provisions adopted by the House today will stifle growth and innovation. We look forward to working with the Senate to help craft legislation which will allow ridesharing to continue in the commonwealth."

Taxi drivers, too, have raised concerns about aspects of the legislation, arguing that it does not put them on equal footing with the app-based ride services.

"The bill has really been designed without the interests of the taxi industry there. There is just absolutely nothing in the bill that levels the playing field," Donna Blythe-Shaw, a representative of the Boston Taxi Drivers' Association, told the News Service. "So we have a significant difference with what has been proposed and what we want."

Michelwitz said during discussion of the bill that it does take taxis into consideration, referring to them as "a segment of the ride-for-hire industry that has existed for over 80 years."

"We have created a provision that will recognize and reward members who choose to embrace technology, safety and greater levels of consumer protection," he said. "These will include such measures as business consulting, guarantees and credit for fleet modernization. In addition, we will also grant proprietary rights for pickups in designated areas for a period of time."

The House rejected an amendment from Minority Leader Brad Jones to allow Uber and Lyft drivers to pick up passengers at Logan Airport and the Boston Convention and Exposition Center, which the bill restricts for the next five years. Three Democrats -- Reps. Diana DiZoglio, Thomas Stanley and Jonathan Zlotnik -- joined 34 Republicans in voting in favor of the amendment.

A Lyft spokeswoman said after the bill's passage that the company cannot support the legislation in its current form, pointing specifically to the airport restrictions.

"The bill limits consumer choice, restricts competition and doesn't serve the best interests of Massachusetts' visitors or residents, who have benefited from Lyft's safe, affordable rides at one of the nation's busiest airports and throughout the Commonwealth," spokeswoman Eileen O'Connor said in a statement. "We are hopeful Massachusetts can find a way to join the nearly 30 states that have passed common-sense rules for ridesharing, and we will continue working with state leaders to find a way forward that preserves modern transportation options for people across the state."

The House also rejected three amendments from Rep. James Cantwell that the Marshfield Democrat said were aimed at protecting the rights of drivers. One of Cantwell's proposals would have classified Uber and Lyft drivers as employees for collective bargaining purposes. The others sought to charge a task force with investigating organizing rights, wages and benefits for drivers.

Cantwell said the bill includes protections for riders -- safety measures like the background checks -- and for the taxi industry.

"But there's still one group that's being left out, and that's the group of drivers," he said. "If you work for Uber or Lyft as a driver ... you're not entitled to any of the fundamental benefits that we all would enjoy today that we see as essential to maintaining our standard of living."

Drivers for transportation network companies, Cantwell said, are classified as independent contractors because the companies "have been able to take advantage of the laws of the land" and the drivers do not receive the same guarantees as full-time employees, including minimum wage and worker's compensation.

Referencing an ongoing federal lawsuit that could elicit a ruling on whether such drivers are employees, Cantwell asked his colleagues to join him in writing a letter to the Massachusetts delegation in Congress asking for action on the federal level.

Despite industry officials from both sides and lawmakers suggesting that it could be a hot-button issue during the House debate, fingerprinting requirements for drivers were not discussed on the floor Wednesday.

When the bill emerged from the Joint Committee on Financial Services, it stopped short of mandating the kind of fingerprint checks that the city of Boston has recently started using to vet cab drivers.

An amendment filed by Moran to require the fingerprinting of ride-for-hire drivers was withdrawn. Moran said he withdrew the amendment because he feels comfortable that the dual industry and state background checks gave the process enough rigor.

"It was just (that) it wouldn't add a tremendous amount of new information that we currently wouldn't get from two background checks," he said of fingerprinting. "I filed it simply to have a dialogue on the issue and when you look at the bill in its whole I think it is certainly ... I think it's fair to say that's a fair level of scrutiny given to these drivers."

The top Senate official thinks fingerprinting deserves consideration.

"I think we should look at it seriously and I'm inclined to think it's a good idea. If we're doing it for taxi drivers, I don't know why we wouldn't do it for Uber drivers," Senate President Stanley Rosenberg said during an appearance on WGBH's "Greater Boston" show on Tuesday night. "We're trying to create a fair and level playing field for these two forms of transportation, which look very, very similar except in the way they're structured financially."

Rep. Geoff Diehl, who was among the 16 Republicans to vote in opposition to the bill, said he worries that government regulation could be harming innovative companies.

"It's free market innovation creating greater efficiencies for riders and the driver, and instead of adding government regulation and fees which would be passed on to the user, we should be allowing these new technologies to flourish," he said.

The conservative non-profit Massachusetts Fiscal Alliance echoed Diehl's thoughts and said that though some regulation of the ride-for-hire industry is "perhaps inevitable," it opposes the House bill because it expands state bureaucracy and limits innovation.

"We believe the free market regulates better than burdensome government bureaucracy," the group wrote in an email to supporters. "This bill goes beyond protecting health and safety, adding stifling regulations aimed at crushing innovation."

Any bill that clears the Senate will need to be reconciled with the House bill, which Speaker Robert DeLeo described as "balanced."

"I am proud that the House took the initiative to tackle this tough issue, effectively safeguarding the innovative nature of transportation network companies while enhancing consumer protection and public safety," DeLeo said in a statement released after the bill was approved. "This is a balanced bill and I thank Chairmen Michlewitz and [Rep. Brian] Dempsey for bringing all sides to the table."