Senate passes ride-for-hire bill favored by app-based industry

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STATE HOUSE — After scrapping a requirement for companies to enable tipping and roughly matching the House and governor’s two-tiered approach toward background checks for drivers, the Senate on Wednesday passed a bill creating a regulatory structure for the novel app-based ride-hailing services like Uber and Lyft.

The bill passed the Senate on a 34-2 vote, with Democratic Sens. Thomas McGee and Marc Pacheco opposed, but not before a few changes were made. The Senate amended the bill to require a state background check for drivers in addition to a company-conducted vetting process.

The technology-enabled transportation companies that connect drivers to passengers via smartphones currently operate under no regulatory structure for their business model. The taxi and livery industry hoped to change that by placing the so-called transportation network companies under a regulatory scheme that includes fingerprint checks on drivers.

After a pitched debate, the Senate opted against requiring fingerprint checks and the legislative body retained a 10-cent-per-ride fee, proposed by the Senate Committee on Ways and Means, which would not be passed on to the customer and would be funneled to the municipality where the ride originated.

Senate Minority Leader Bruce Tarr and eight other Republicans and Democrats sought to eliminate the fee that Tarr said would go into a “slush fund,” though they were defeated by 30 Democrats.

Sen. Linda Dorcena Forry, a Dorchester Democrat who advocated for additional safety measures to be included in the bill, said lawmakers expect the 10-cent fee would not be passed onto the drivers either and argued the companies could afford it.

“Ten cents, come on,” Forry said.

A group of 13 other Democrats joined Forry in pushing for a fingerprinting requirement for drivers using the apps, though that effort was defeated by a bipartisan group of 24 senators opposing the measure.

“Fingerprint is the gold standard, folks,” said Sen. Barbara L’Italien, who said fingerprints are already required for educators and others. The Andover Democrat said when her husband drove for a ride-hailing app he realized that passengers are put in a vulnerable position.

Opponents countered that it would be a governmental overreach, potentially deter the black and Latino population from participating as drivers, and the division of the Department of Public Utilities – the regulatory authority that would oversee the new industry – could already decide on its own to require that step.

“It would be well within the powers of the division to require a fingerprint-based background check,” argued Belmont Democrat Sen. William Brownsberger. Gov. Charlie Baker did not include a fingerprinting requirement in his version of the bill filed last year, nor did the House.

Sen. Mark Montingy, a New Bedford Democrat, said the government should not collect fingerprints “willy-nilly.”

“This is private information,” Montigny said.

Sen. Jamie Eldridge, an Acton Democrat, said a fingerprint requirement could have a “chilling effect,” creating a barrier for black and Latino individuals to become drivers.

The strong vote in favor of the bill (S 2371) might belie the passionate debate that took place over rider safety, treatment of Uber and Lyft drivers as independent contractors as opposed to full-fledged employees and whether the upstart companies are making deep cuts into the heavily regulated taxi industry.

“They’re being hurt in a disproportionate way,” said Senate Ways and Means Vice Chairman Sal DiDomenico of taxi drivers. He said, “The rules have changed in the middle of the game somewhere along the line.”

DiDomenico paired his vote with Senate Labor and Workforce Development Chairman Dan Wolf, essentially removing both votes from the recorded total.

“When does the innovation economy become the exploitation economy?” asked Wolf, a Harwich Democrat, near the start of the hours-long debate. “Because that’s what we are party to.”

Wondering aloud whether the attorney general’s office would take note of his comments, Wolf said under Massachusetts labor laws the drivers should be employees of the ride-hailing companies rather than independent contractors.

McGee, the Senate Transportation Committee chair, and Senate President Pro Tem Pacheco were the two votes against the bill after Pacheco expressed bewilderment that the Senate had removed a Ways and Means proposed requirement that ride-hailing apps include a tipping option.

“I just think there were a lot of people who had strong feelings that it was not the place for the Legislature to require that tipping be allowed,” said Eldridge, the Senate chairman of the Financial Services Committee, who noted apps can opt to allow tipping as Lyft already does.

Senate Ways and Means Chairwoman Karen Spilka declined to say whether she believes the Senate version of the bill is more friendly to the transportation network company industry than the House version, though reactions from those advocating on the issue seemed to suggest as much.

After passage of the House bill, Lyft said it “limits consumer choice, restricts competitions and doesn’t serve the best interests” of people in Massachusetts who have used the service. On Wednesday, Lyft spokeswoman Chelsea Wilson praised the Senate bill as “legislation that expands consumer choice, encourages innovation and ensures passenger safety in the Commonwealth.”

“We are clearly disappointed with outcome of today’s Senate session and the passage of their Ride for Hire legislation,” said Scott Solombrino, spokesman for Ride Safe Massachusetts – representing the taxi and livery industry. After the House passed its version, Solombrino said, “Massachusetts is positioned to be the first state in the U.S. to stand up for passenger safety by finally regulating Uber and Lyft.”

“This is a pro-consumer bill,” Spilka told her colleagues at the start of debate Wednesday.

The Senate adopted an amendment sponsored by Weymouth Republican Sen. Patrick O’Connor eliminating a provision of the bill that would have required a hearing before ride-hailing companies can suspend drivers on suspicion that they violated a law or are unsuitable.

While knocking the Senate for including the 10-cent fee, Massachusetts Fiscal Alliance Executive Director Paul Craney noted the Senate bill did not – as the House had – bar transportation network companies from picking up riders at the Boston Convention and Exhibition Center for five years.

House leaders defended excluding the app-enabled drivers from picking up passengers from the convention center as repayment for the taxi industry’s contribution to the original construction of the building when 260 taxi medallions were sold raising $40 million nearly two decades ago.

Craney, who said he advocated against the restriction and said his organization does not receive funding from transportation network companies, said he is “happy they didn’t ban an emerging industry to bail out another failing industry.”

— Written by Andy Metzger

Copyright State House News Service