States Say Uber's Background Checks Need a Lift

Uber Driver

In the past year, state legislatures have been quick to respond to the lack of government oversight of the hiring practices of ride sharing network companies such as Uber, Lyft and SideCar. (Numerous localities have stepped in as well, to pick up where the states leave off.)

These companies – often referred to as “transportation network companies” or “TNCs” – use digital networks or software applications to connect passengers to individuals who contract with the companies and provide transportation services using privately owned vehicles.

California hasn’t stopped at regulation, and has taken on a class-action lawsuit against Uber to challenge its background check procedures.

A Look at State Laws

Approximately 22 states and the District of Columbia currently require criminal background checks for all TNC drivers.  (Maryland also requires drivers to submit to background checks, but this is done as part of their TNC driver licensing process and isn’t the company’s responsibility.)  Some states solely require national criminal records checks, while others also mandate checks of local criminal records, national or local sex offender registries, or driving history records.

Yet, few laws have targeted the accuracy of these background checks or provide guidance as to what they must involve.  California regulations state that checks must be conducted by using an individual’s Social Security number, and not just his or her name, in an effort to curb issues of driver misidentification.  Kentucky’s TNC statutes specify that checks may only be conducted by entities approved by its Department of Vehicle Regulation, while Nebraska states that the background checks must be “at least as comprehensive” as the national criminal history checks performed by the FBI for individuals providing transportation services for the Nebraska Department of Health and Human Services.

Further, while most jurisdictions require such checks to be conducted before the individual is authorized to drive for the TNC, many don’t require follow-up.  Among the exceptions are North Carolina, Colorado, and the District of Columbia, which require companies to conduct new background checks every two, three, or five years, respectively.

Virginia, in addition to requiring biannual background checks, mandates that a driver must notify the company of any new arrest or conviction that occurs after his or her authorization.  TNC drivers in Nevada must be recertified every year and must be immediately terminated if they fail to report any new convictions.  Without these recertification or reporting requirements, a TNC won’t necessarily be aware of crimes or moving violations that its drivers may commit after their initial approval.

Even with such laws and regulations on the books, enforcement is still an issue.  Approximately half of the states with TNC laws don’t specify penalties for drivers or companies that fail to comply.  And sadly, in some instances, those failures only come to light after tragedy has already struck.

“Misleading Representations” and Negligence Claimed in Court

In August 2015, district attorneys from San Francisco and Los Angeles filed an amended complaint against Uber on behalf of the People of California, alleging that the company made untrue or misleading representations regarding the reliability of its background checks in violation of California’s Business and Professions Code.  The complaint alleges “systemic failures” in the manner that Uber conducts background checks for its drivers, leading to “registered sex offenders, a kidnapper, identity thieves, burglars, and a convicted murderer” serving as drivers.  A hearing is scheduled in this case for Jan. 28, 2016.

Uber has successfully evaded a claim of negligent hiring in the District of Columbia, where the District Court granted Uber’s motion to dismiss a lawsuit brought against it by a passenger who claimed he was stabbed six times by an Uber driver.  In its Sept. 15, 2015, decision, the court held that the passenger failed to assert either that Uber didn’t conduct a background check consistent with its policy (as stated on its website) or that the background check wasn’t reasonably calculated to discover any “red flag[s]” in the driver’s past.  While the court noted that it was not possible, absent discovery, for the passenger to ascertain what Uber knew about the driver’s background at the time he was hired, it went on to state that such allegations of negligent hiring, without more, would potentially subject Uber to “costly and potentially meritless litigation.”

What More Should TNCs Do?

Some people have cautioned that TNCs are being held to unreasonable standards.  Uber has argued that similar types of criminal convictions have been uncovered for taxicab drivers despite the fingerprint-based checks required of them in San Francisco, and that neither the background checks required of taxicab drivers nor its own background checks can be foolproof.  Others have argued that fingerprint-based checks may have the potential for negative economic effects, as Kansans can attest to.

Uber users in that state may have had whiplash after watching their government's attempts to regulate the business.  Kansas’ TNC law initially required its Bureau of Investigation to obtain fingerprints from prospective drivers (and also required extensive insurance coverage for drivers).  The legislation was passed only after Governor Brownback’s veto was overridden May 5, 2015.

In a message accompanying the veto, he stated that while citizens’ safety was a concern, the Kansas bill had the potential to stifle the emerging TNC industry and the job creation that could come with it.  As a result of the new requirements, Uber briefly ceased its operations in the state.  Almost immediately after the governor signed new legislation May 22, 2015, that removed the finger-printing requirements, among other changes, the company resumed business in the state.

As ride-share networks and similar app-based enterprises continue to grow in popularity, no doubt states will continue to take a new look at their business and labor regulations in an effort to meet the needs of both this new industry and customers.

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