Uber, Lyft Get Fingerprint Waiver in Maryland, Model for Other States

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Jon Steingart

Uber and Lyft will continue operating in Maryland after winning permission to use a driver background check process that doesn’t require fingerprinting. Maryland’s process in granting the waiver could be model going forward, at least for other states.

Background check processes by the ride-hailing companies are “as comprehensive and accurate as the fingerprint-based background check process” the state law contains, the Maryland Public Service Commission found. Therefore, it approved the companies’ proposed alternative processes ( In the Matter of the Petitions of Rasier, LLC and Lyft, Inc. for Waiver of Public Utils. Art. Section 10-104(b) , Md. Public Service Comm’n, No. 9425, 12/22/16 ).

The commission’s decision calls for only slight modifications to the background check processes already used by Lyft Inc. and by Uber Technologies Inc.'s Maryland subsidiary, Rasier LLC. The companies already do annual reruns on background checks, for example. Representatives for both companies told Bloomberg BNA they will comply with the terms.

The companies contended that background checks based on name, Social Security number and other identifiers are superior to fingerprinting. The Maryland waiver application was the first time they argued in a quasi-judicial setting. Previously, they had to make their case before legislative bodies and committees in the dozens of states and municipalities that have enacted ride-hailing regulations.

Creating a waiver process was part of the bargaining that led to legislation amenable to all sides, state Sen. Bill Ferguson said. “No side was thrilled about it but all sides were willing to accept it to move forward the other agreements,” he said. The Baltimore Democrat was the bill’s lead sponsor.

“I think Uber and Lyft would be happy to use this model going forward, but it doesn’t make a whole lot of sense for cities to pursue this option,” said Harry Campbell. He drives for both companies in Los Angeles and runs a blog called The Rideshare Guy.

 “Taxis already have to follow much stricter regulations and companies like Uber and Lyft are typically the only ones affected by new regulation.  So it seems like a lot of hassle and bureaucracy for governments to enact new regulations and then just provide Uber and Lyft with a waiver that effectively keeps the status quo,” Campbell told Bloomberg BNA Dec. 22.

Tip of an Iceberg

Ferguson, the state senator, said these issues are just the beginning of a larger discussion that needs to happen throughout the economy. “We’ll never be able to forecast or see ahead what industries are next,” he said.

“In this case it’s about whether or not to fingerprint,” he said. “We’re seeing a radical change and departure in the traditional employee and employer relationship in the startup culture that is coming into existence.”

“Our economy is more nimble and flexible,” Ferguson said. “What happens when we have autonomous cars? Joint ownership of homes through crowdsourcing?”

“We have to create more flexible regulatory schemes that can adapt around core values that we establish through public policy,” he said. “We have to think about what is a more flexible regulatory system that can adapt just as quickly.”

Waiver Process Open to All

The ruling will preserve Marylanders’ access to work opportunities and reliable transportation, Tom Hayes, general manager for Uber in Maryland, Virginia and Washington D.C., said in a statement provided to Bloomberg BNA Dec. 22. He thanked the commissioners “for carefully considering the public safety protections Uber has put in place to ensure Marylanders have access to a safe, reliable ride throughout the state.”

Chelsea Harrison, Lyft’s senior policy communications manager, told Bloomberg BNA Dec. 22 the decision “prioritizes public safety while preserving transportation choice for people in Maryland.” Lyft will continue to work with the Commission as it expands Maryland operations in 2017, she said.

The companies could decline the modifications, but then they would have to use fingerprint-based background checks if they want to operate in Maryland. They have threatened to end operations in jurisdictions that require fingerprinting.

“One of the features of this compromise was that it wasn’t just Lyft and Uber that would be able to access this process,” Ferguson said. “It was important to me that the playing field be level for everyone,” including the coalition of taxi companies involved in drafting it.

“I don’t know if they supported this bill, but they withdrew the opposition because of this compromise,” Ferguson said of the taxi coalition, led by Baltimore’s Yellow Cab Company.

Fingerprinting Required in New York

Dwight Kines, a regional vice president for Yellow Cab parent Company Transdev on Demand, thought existing processes were sufficient. “What the Public Service Commission has in place right now for taxicabs—you can get a provisional approval to drive with a third party online background check, pending the FBI fingerprint background check—has worked out great for us,” he told Bloomberg BNA Dec. 21. Transdev operates taxi companies in Baltimore and 17 other cities.

“We can get our drivers on the street in a day or two,” he said. “If there was a similar provision for Uber and Lyft it would not be a deterrent for their drivers.”

There is a fingerprinting requirement in New York City, where Lyft and Uber comply. “As with all New York City Taxi and Limousine Commission licensees, their bases, vehicles and drivers must all be separately licensed to ensure maximum accountability, safety and consumer protection,” Allan Fromberg, deputy commissioner for public affairs with the New York City Taxi and Limousine Commission, told Bloomberg BNA Dec. 20.

“Uber and Lyft and the drivers that work with them must be in compliance with our requirements, which includes the fingerprint-based background check,” Fromberg said. The commission considers it the “gold standard,” he said.

Rules Come, Rules Go

Things are different in Houston. “Drivers are required to be fingerprinted through the FBI fingerprint database,” Lara Cottingham, deputy assistant director for the city’s Administration and Regulatory Affairs Department, told Bloomberg BNA Dec. 20.

Lyft followed through on a promise to leave and exited Houston in 2014 after the city passed regulations requiring fingerprint-based background checks. Uber continues to operate there, but it has expressed doubt as to whether it will remain in the state’s largest city after the Super Bowl in February if Houston doesn’t revise its requirements.

Houston law allows the department to approve alternative companies for fingerprint-based background checks if they search “a national criminal history database and a national sex offender database.”

“We define national as checking all 50 states,” Cottingham said. “There isn’t a company that does that.” The breadth of probing that the city law requires can only be carried out by a government database search, she said.

Elsewhere in Texas, both companies made good on a pledge to leave Austin. They announced their departure a few days after voters allowed a city council-passed fingerprint-based background check requirement to move forward.

Other jurisdictions have backed away from plans to require fingerprinting. Broward County, Fla., rolled back its fingerprint rules in 2015 after going a few months without Uber and Lyft. It happened that year in San Antonio, Texas, too.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

For More Information

The decision is available at http://src.bna.com/kXB.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Labor & Employment on Bloomberg Law