BILL ANALYSIS                                                                                                                                                                                                    Ó


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                                    THIRD READING

          Bill No:  AB 612
          Author:   Nazarian (D), et al.
          Amended:  8/19/14 in Senate
          Vote:     21

           SENATE ENERGY, UTIL. & COMMUNIC. COMM.  :  8-2, 6/17/14
          AYES:  Padilla, Block, Corbett, De León, DeSaulnier, Hill,  
            Pavley, Wolk
          NOES:  Fuller, Cannella
          NO VOTE RECORDED:  Knight

           SENATE APPROPRIATIONS COMMITTEE  :  5-0, 8/14/14
          AYES:  De León, Hill, Lara, Padilla, Steinberg
          NO VOTE RECORDED:  Walters, Gaines

           ASSEMBLY FLOOR  :  Not relevant

           SUBJECT  :    Charter-party carriers of passengers:   
          online-enabled application or platform

          SOURCE  :     Taxicab Paratransit Association of California

           DIGEST :    This bill requires all charter-party carriers,  
          including transportation network companies (TNCs), to submit all  
          of its drivers to a Department of Justice (DOJ) criminal  
          background check and to participate in the Department of Motor  
          Vehicle's (DMV's) pull-notice system, as specified. 

           ANALYSIS  :    



                                                                     AB 612

          Existing law:

          1.Authorizes the Public Utilities Commission (PUC) to regulate  
            various transportation services, including charter-party  
            carriers of passengers, defined to mean persons engaged in the  
            transportation of persons by motor vehicle for compensation on  
            a prearranged basis over any public highway in California, but  
            not including taxicabs licensed or regulated by local  

          2.Requires charter-party carriers with seating capacity for up  
            to seven passengers (limousines) to carry $750,000 commercial  
            liability insurance effective full-time.

          3.Requires personal automobile insurance with minimum liability  
            coverage of at least $15,000 for death and personal injury,  
            $30,000 for death or injury of two or more persons, and $5,000  
            for property damage (15/30/5), and excludes coverage for any  
            commercial use of a vehicle under a personal automobile  
            insurance policy.

          4.Requires charter-party carriers to enroll in DMV's pull-notice  
            system to receive automatic notice of adverse entries or  
            actions on a driver's driving record.

          5.Requires a charter-party carrier to provide for a mandatory  
            controlled substance and alcohol testing certification program  
            as adopted by the PUC, which includes pre-employment,  
            post-accident, reasonable suspicion, follow-up, and  
            return-to-duty testing.

          6.Requires a driver who drives a vehicle as specified, shall  
            participate in a pull-notice system, which is a process for  
            the purpose of providing the employer with a report showing  
            the driver's current public record and any subsequent  
            convictions, failures to appear, accidents, driver's license  
            suspensions, driver's license revocations, or any other  
            actions taken against the driving privilege or certificate,  
            added to the driver's record while the employer's notification  
            request remains valid.  (Vehicle Code Section 1808.1).

          Existing PUC decision:

          1.Requires each TNC to maintain commercial liability insurance  


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            policies providing not less than $1 million coverage per  
            incident involving a vehicle and driver while "providing TNC  

          2.Requires TNCs to participate in the DMV pull-notice system  
            once non-employees are allowed, but in the meantime requires  
            TNCs to check driving records prior to approving a TNC driver  
            and quarterly thereafter.

          3.Requires TNCs to implement a zero-tolerance policy for its  
            drivers, disclose to riders how to report a driver suspected  
            of being under the influence of intoxicating substances, and  
            suspend a driver promptly after a zero-tolerance complaint is  

          4.Requires TNCs to conduct criminal background checks for each  
            applicant before becoming a TNC driver, which must utilize a  
            national check and sex offender database, with specified  
            offenses making an applicant ineligible.

          5.Requires charter-party carriers to have permanent markings,  
            registration number, and a PUC-issued decal on vehicles.

          6.Requires TNCs to have "trade dress" on each vehicle providing  
            TNC services that is visible to a passenger or law enforcement  
            official, although it may be removable.

          This bill:

          1.Requires that all drivers of a charter-party carrier shall be  
            subject to DOJ fingerprint images and related information for  
            a background check.

          2.Requires driver be denied employment or have their contract  
            voided if they are required by any law to register as a sex  
            offender or have been convicted of any specified felony,  
            within a seven-year period from the date of his or her  
            application, and specifies out of state violations will be  

          3.Requires DOJ to charge a fee sufficient to cover its costs in  
            providing the background check.

          4.Specifies that a charter-party carrier must participate in  


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            DMV's pull-notice system in order to fulfill the existing  
            requirement that it regularly checks the driving records of  
            all drivers.

          5.Expands Vehicle Code Section 1808.1 to include TNCs in DMV's  
            pull-notice system.

          6.Provides that drivers hired or initially retained by a  
            charter-party carrier on or after January 1, 2015, shall be  
            subject to background checks and mandatory drug and alcohol  
            testing prior to enrollment or retention.  Drivers hired or  
            initially retained before January 1, 2015, shall complete a  
            background check and drug and alcohol test before January 1,  

           Smartphones transform how to get a ride  .  The Internet and  
          proliferation of smartphones have transformed many aspects of  
          life and commerce, including how to get a ride.  Instead of  
          hailing a cab, or calling a reservation car service, a growing  
          number of consumers are using new app-based services that  
          connect drivers with passengers.  With GPS and geolocation  
          technology as the foundation of the business model, companies  
          such as Uber, Lyft, and RideShare enable customers to download  
          an app that alerts participating drivers in the area of the need  
          for a ride.  Drivers with their TNC app turned on get a signal  
          on their smartphones and can accept or reject the ride request.   
          The customer can see photos of responding drivers and their  
          vehicles, as well as customer ratings of each driver and accept  
          or reject the driver.  When a passenger and driver make a match,  
          the ride is provided, and payment is made electronically on the  
          smartphone, with drivers getting a portion.

          App-based ride services were born in California and began  
          operation in the Bay Area in 2012.  Uber, the largest ride  
          service company, is now available in more than 100 cities in 35  
          countries and was recently valued at about $17 billion.

          Drivers with these new services use their own vehicles and most  
          have other jobs.  Lyft reports that 54% of its drivers have a  
          full-time job, 30% work part-time, with more than a third  
          driving less than five hours a week, and only 10% driving more  
          than 30 hours per week.  Some drivers turn on their app and  


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          accept riders in their spare time or focus on weekends and  
          evenings in busy entertainment districts when "surge" fares are  
          in effect.  Uber has two models - Uber drivers who are licensed  
          limousine drivers, and UberX drivers using their own vehicles.   
          Many taxi drivers also are signing up with the new services to  
          supplement taxi income or switching fulltime to the new model.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

          According to the Senate Appropriations Committee:

           One-time costs of $185,000 from the PUC Reimbursement Account  
            (special) and the PUC Transportation Reimbursement Account  
            (special) to the PUC costs to oversee new requirements and to  
            update the general order regarding charter-party carriers.

           Costs of $219,000 in FY 2014-15, $367,000 in FY 2015-16, and  
            $187,000 in subsequent years (special) to DOJ for background  
            checks.  These costs will be fully reimbursed by fees charged  
            to the charter-party carrier.

           SUPPORT  :   (Verified  8/13/14)

          Taxicab Paratransit Association of California (source)
          Association for Los Angeles Deputy Sheriffs
          California Airports Council
          California Association of Highway Patrolmen
          California Fraternal Order of Police
          California Labor Federation
          Consumer Attorneys of California
          Greater California Livery Association
          Long Beach Police Officers Association
          Los Angeles County District Attorney's Association
          Los Angeles County Professional Peace Officers Association
          Los Angeles Police Protective League
          Riverside Sheriffs' Association
          Sacramento County Deputy Sheriffs Association
          San Diego County Regional Airport Authority
          San Francisco International Airport
          Santa Ana Police Officers Association

           OPPOSITION  :    (Verified  8/13/14)


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          Legal Services for Prisoners with Children

           ARGUMENTS IN SUPPORT  :    According to the author, this bill  
          applies basic consumer safety requirements that currently apply  
          to other entities that transport people for hire to  
          online-enabled transportation companies, including commercial  
          liability insurance that covers the driver, passengers, and the  
          public in all situations; drug testing and LiveScan criminal  
          background checks of drivers; DMV pull notices that send alerts  
          of drivers driving under the influence and moving violations;  
          and permanent vehicle markings to aid enforcement against  

           ARGUMENTS IN OPPOSITION  :    Legal Services for Prisoners with  
          Children state, "AB 612 requires fingerprinting to examine the  
          lifetime criminal history of each driver.  It requires that any  
          person who has been convicted at any point in their lifetime of  
          unrelated offenses including credit card fraud, forgery, or drug  
          offenses would never in their lifetime be allowed to become a  
          driver using an online enabled platform.  This blanket exclusion  
          would prevent otherwise qualified drivers from access to an  
          important economic opportunity.  There are also racial  
          discrimination considerations, as arrest and incarceration rates  
          for these offenses are markedly higher for persons of color."  

          JG:e  8/19/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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