Gig Economy Local Government Requirements

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Gig Economy Local Government Requirements

The gig economy is growing quickly and businesses need to be aware of all the challenges that come with the shifting landscape. From a variety of state laws, to requirements for independent contractors, to the benefits workers are looking for, there is much to consider. In addition to outlining many of these challenges below, we also provided a snapshot of what workers need to know when looking to work for gig companies including Uber, Lyft, Airbnb, and TaskRabbit.

Lyft

Age

  • The minimum age requirement for driving with Lyft is 21. However, there are cities/states that require drivers to be older. Unfortunately, in order to find the age requirements, it is necessary to examine the page for each state individually which would be outside the scope of this request.
  • Examples of locations where the minimum age to drive for the company is 25 include everywhere in Alabama except Tuscaloosa; Colorado Springs, Resort Rockies, Fort Collins, and Grand Junction in Colorado; everywhere in Indiana except Bloomington, Evansville, and Muncie; everywhere in New York state except Nassau County, Westchester County, and New York City.
  • As it is not possible to examine the requirements for every state and local government, our strategy was to pick two to three locations that are spread out geographically for each service. Different locations were chosen for Lyft, Uber, Airbnb, and TaskRabbit as that gave us the ability to review 12 locations overall.

Denver, CO

  • Lyft drivers must be a minimum of 21 years of age.
  • Although the state of Colorado does not require annual inspections for most vehicles, Lyft does require annual inspections.
  • Lyft drivers in Colorado are also required to pass a Colorado TNC Driver Medical Exam. These exams are valid for a maximum of two years.
  • While Denver does not require any business licenses or permits for Lyft drivers, both Telluride and Vail do have requirements that are in addition to those required by Lyft.
  • In addition to the standard driving time limits imposed by Lyft, Colorado has some additional requirements. Drivers can't be in driver mode for more than 12 consecutive hours, can't spend more than 16 hours in driver mode in a single day, or spend more than 70 hours per week in driver mode. Violations can result in having your account paused, being permanently deactivated, and receive fines of up to $2,500 per day.

Green Bay, WI

Allentown, PA

  • Lyft drivers must be a minimum of 25 years of age.
  • In addition to the standard documentation, drivers in Allentown must also provide a photo of their state inspection sticker from Pennsylvania, New Jersey, Delaware, or New York.
  • Allentown drivers are only required to display the standard Lyft emblem on their front windshield, but in Philadelphia, a front and back emblem are required.
  • Lyft's standard driving time limits are in place throughout Pennsylvania, including Allentown.

General Insights

  • The Sea-Tac Airport requires Lyft drivers to have a For-Hire permit along with a TNC vehicle decal.
  • In Oregon, Portland requires a free City of Portland Business License, and Medford also requires a business license.
  • Indeed has 3.6 thousand reviews by Lyft drivers, and the average rating is 3.5 out of 5. By category, work/life balance is rated highest, followed by culture, management, job security/advancement, and compensation/benefits.


Uber

Age

  • Uber requires drivers to be at least 21 to drive for the company, but there may be more stringent requirements in some cities or states.
  • While Uber makes it relatively easy to find details on the vehicle requirements for driving in various cities, for example, here is the information on San Francisco, the details on age requirements does not appear to be provided by the company.
  • Uber does require that all drivers have a full year of licensing history, and for drivers that are under age 23, they must have three years of licensing history.
  • To provide insights on the laws, requirements, and challenges that drivers of Uber need to be aware of, we examined three locations: San Francisco, CA; Nashville, TN; and Boston, MA.

San Francisco, CA

  • California enacted the AB5 law on January 1, 2020, which makes it more difficult for companies to classify workers as independent contractors. As a result of that law, Uber has made changes to their model.
  • Under the law, workers need to meet three criteria in order to be classified as a contractor, rather than an employee. One of these criteria is to be free from company control, so Uber is testing a program that gives drivers the ability to set their own rates and to reject rides without penalty.
  • In California, the state regulates rideshare companies, while cities and counties regulate taxis. Therefore, any requirements in San Francisco would be the same throughout the state, as localities are not able to implement their own laws. The California Public Utilities Commission (CPUC) is responsible for making the rules in the state.
  • The San Francisco City Attorney's office has asked Lyft and Uber to provide some data on their business in the city, but so far Uber has refused to cooperate. Because rideshare companies are contributing to major traffic headaches in the region, the city attorney is considering a range of legal actions that would allow them to get more data and provide some type of local regulation.
  • San Francisco is currently considering a per ride tax that would raise money for road improvements. This proposal will be on the ballot in November so voters can decide whether to move forward with the fee.
  • In October 2017, SB182 was signed into law by the governor of California. The law requires drivers of transportation network companies (TNC) to obtain a business license if they worked on a driving platform for more than 30 days in the previous year. This license is only required if stated by the local jurisdiction where the driver lives. Uber does notify their drivers that this may be required, but does not provide local guidance on specific cities within the state of California.
  • Although San Francisco was requiring all TNC drivers to obtain a business license in the city, this was temporarily suspended in April 2018 as a lawsuit by the city attorney makes its way through the courts.

Nashville, TN

  • Uber provides very little data on the requirements for driving in Nashville.
  • According to a post by UberKit, Nashville does not have any additional age requirements beyond those implemented by Uber itself.
  • Tennessee passed a state-wide law in 2016 that set up the rules that must be followed by TNCs. While many of these rules were about insurance and what the responsibilities were in case of an accident, two items directly impacted how drivers conduct their business. The first requires that no business is conducted in cash, and the second is that drivers must keep two years of trip records. There was nothing in the law requiring business licenses or permits.

Boston, MA

  • As with Nashville, and other cities, Uber provides little data on the requirements for driving in Boston.
  • The Joint Transportation Committee of the Massachusetts legislature is considering a proposal by the governor that would require companies such as Uber and Lyft to provide data on when and where passengers are being picked up and dropped off. The goal would be to obtain more information on where the companies are operating and how much they may be contributing to greenhouse gas emissions.
  • Another component of the proposal would be implementing fines and possible jail time for drivers who allow other unapproved individuals to drive using their account. This practice is known as account-renting.
  • Also under consideration are increased penalties on drivers who do not keep up with the requirements already in place, such as inspections, background checks and visible decals; and the possibility of allowing localities to impose their own fees on top of the $0.20 currently charged by the state.

General Insights

  • Indeed has 11.7 thousand reviews by Uber drivers in the U.S., and the average rating is 3.6 out of 5
  • . By category, work-life balance is rated highest, followed by culture, management, pay & benefits, and job security & advancement.
  • It appears that Uber's biggest challenge may be unhappy drivers due to low wages. Many drivers went on strike for a day in May 2019 to protest issues with the company, and many people joined in on social media. Although no immediate changes were seen as a result, it is possible that the TNCs will see that consumers overall don't support hurting workers in order to make a profit.


Airbnb

General Requirements

  • Airbnb has limited requirements for hosts on the platform. Anyone who can provide safe and comfortable accommodations can be a host, as long as they follow all local regulations and follow basic hosting requirements.
  • The company's basic requirements include being responsive, accepting reservation requests, avoiding cancellations, maintaining a high rating, and providing essential amenities.
  • This article summarizes the short-term rental laws in major U.S. cities including New York, Los Angeles, Chicago, and Washington D.C.

New York, NY

  • New York City is the largest market for Airbnb, but the city claims that up to 2/3 of the listings are illegal.
  • The laws in New York City state that entire apartments in multiple dwellings can't be rented for less than 30 days, they can't be advertised, and there can only be up to two paying guests.
  • If a long term rental is changed to short term rental use, a new certificate of occupancy needs to be filed indicating the rental is now for transient use. An application for a new certificate will also trigger an inspection to make sure occupancy standards are met.
  • Hosts that live in rent-controlled housing need to ensure that short -term rentals are allowed, and that they aren't charging rents that are higher than allowed. "The New York Administrative Code (available under “ADC” on New York State’s website) contains rules for rent stabilized (Section 26-501-26-520) and rent controlled (Section 26-401-26-415) housing."

Davenport, FL

  • Davenport, FL, was listed as a location with high earning potential for Airbnb so we included it in our analysis.
  • Many Airbnb listings in Florida will be categorized as vacation rentals which require a rental license to operate. The rentals would fall into one of two categories: dwelling or condo.
  • The state is pushing for statewide regulations, while many cities want the ability to enact their own laws around short term rentals.
  • Overall, Davenport was listed as one of the locations with the least legal issues.

General Insights

  • Some cities with relatively lax requirements for Airbnb include Dallas, El Paso, and San Antonio, TX; Phoenix, AZ; Indianapolis, IN; and Columbus, OH.
  • U.S. cities making it more difficult for Airbnb hosts include Los Angeles, CA; San Francisco, CA; New York City; Charleston, SC; Santa Monica, CA; New Orleans, LA; and Las Vegas, NV.
  • In Las Vegas and New Orleans, hosts must register with the city; in Santa Monica host must be on property during the rental; and Charleston has used undercover teams posing as tourists with the goal of uncovering illegal listings.


TaskRabbit

General Requirements

  • To be a Tasker in the U.S., people must be 18 years old, have a social security number for the background check, have a checking account and credit card, and have a smartphone to use the app on. The checking account is to receive payments, and the credit card is to pay a $25 registration fee.
  • Of note, recent sources (February 2020) indicated that the age requirement for TaskRabbit is 21, although this is different from the company's official help page. This may be an indication that this had changed recently, but we were not able to confirm this.

California

  • AB5 is a law that went into effect in California on January 1, 2020. The purpose of the law was to keep employers from classifying people who should be classified as employees, as freelancers. The state believed this designation was being used by employers to avoid providing benefits and paying people minimum wage.
  • One of the strategies that freelancers who want to keep working can employ is to obtain a business license, and ensure they are set up as a legitimate business for tax purposes.
  • According to the California Secretary of State website, most businesses in California require a license or permit to operate. Workers can find information on potential requirements at the CalGOLD website.
  • While we did not find a job type that would have been a perfect fit for a Tasker, there were plenty of jobs listed that may include the type of tasks that would be completed by someone working for TaskRabbit. These included graphic design, landscaping, and building and dwelling services.
  • A search of these types of services for Agoura Hills found that all entities doing business in the city are required to obtain a business certificate.
  • Finally, although Reddit is not usually a source we use for research, we did locate a screenshot that a user shared indicating the requirements for Taskers to keep working in California. One of the key points was that the Taskers had till April 6, 2020, to provide proof of obtaining a business license.

North Carolina

  • Many of the tasks offered on TaskRabbit would be those that would be done by a handyman. In North Carolina, there are no licenses for a handyman, however, if someone makes more than $30,000 per year from these jobs, they must register as a general contractor.
  • With over 80 business licenses offered in NC, it is very possible that a Tasker would be required to have one based on the types of tasks they are doing and how much income they are making.

General Insights

  • There are only 108 reviews on Indeed by TaskRabbit Taskers. Of those reviews, the average rating is 3.4 out of 5. By category, work-life balance is rated highest, followed by culture, pay & benefits, job security, and management.
  • Users rate their satisfaction with TaskRabbit on Sitejabber, and the average review is 2 out of 5 stars, indicating many people are not satisfied with the work that is done. This is based on 302 reviews.
  • On the TaskRabbit website, California appears to be the only state they provide direction with regard to needing/obtaining a business license. This help is mainly focused on how to provide that information to Task Rabbit and leaves the determination of whether it is needed up to the Tasker.


Gig Economy

Workforce Changes

  • In 2016, 34% of Americans participated in the gig economy. This was expected to grow to 43% by 2020.
  • McKinsey reported that were about 68 million people independently employed in the U.S., with about 4 million working through gig centers such as Lyft.
  • Sixty percent of freelancers in the U.S. said they are freelancing as a choice. Additionally, about 28.5 million consider themselves long term freelancers.
  • The freedom to work when and where they want is a big draw for freelancers. In order for corporations to entice these workers to commit to a corporate job, flexibility and part-time benefits are likely going to need to be part of the package.
  • Corporations are realizing that they can more effectively manage their fixed labor costs by taking advantage of contractors. This shift will provide more opportunities for both workers and businesses set up to support the gig workers.
  • The traditional worker that has formed the basis of companies workers for years, will begin to fade quickly as a new generation enters the workforce. Many of the Gen Z generation have seen their parents working independently, and becoming entrepreneurs. This gives this group a different view of what employment looks like.

Labor Laws

  • In April 2019, the U.S. Department of Labor published some guidance on how gig workers should be treated, which was the result of a lawyer reaching out to the Department for information on how certain workers should be classified.
  • The response given by the Labor Department was, "Based on the facts you provide in your letter, it appears that the service providers who use your client’s virtual marketplace are independent contractors. Your client provides a referral service. As such, it does not receive services from service providers, but empowers service providers to provide services to end-market consumers. This response was interpreted by many to indicate that freelancers/contractors/gig workers were not eligible for the protections offered to employees under the Fair Labor Act.
  • While this letter published by the Labor Department is not law, it certainly is a piece of evidence that companies could cite in court filings to strengthen their case for classifying workers as contractors, rather than as employees.
  • As described above, California implemented AB5 in January of this year which made it more difficult to classify workers as contractors.
  • Labor laws vary wildly across the country and that can make operating a business that utilizes independent contractors very complicated for companies. For example, courts in Pennsylvania and Florida have ruled that Uber drivers are independent contractors, but a judge in NY ruled the opposite.
  • Handy, a gig platform that offers handyman services, raised $100 million to lobby state legislators to pass laws that classify these workers as contractors. Partially as a result of their work, Kentucky, Utah, and Indiana have passed such laws. Georgia, Colorado, Iowa, Tennessee, and Alabama have introduced bills to accomplish the same thing.
  • A federal bill has also been introduced which would require that independent contractors be treated as employees. Although the bill does not appear to be gaining traction, it does show that at least some legislators are considering the rights of contractors and how they can be protected. The question may be if all those workers actually want the protection.
  • States will need to balance the desire to support gig workers with laws that aren't so strict that they make it impossible for freelancers to continue working in a given state. Corporations will have to keep an eye on these laws as well to ensure they are meeting their legal obligations in regard to this worker class.
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