Uber, Lyft Leave Austin Over Fingerprinting Ordinance

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 Paul Stinson

May 9 — Ride-sharing companies Uber and Lyft have ceased operations in Austin, Texas, following a defeat at the ballot box, as voters rejected an ordinance that would have halted fingerprint-based criminal background checks for new ride-share drivers in the city.

Defeated with 56 percent of the vote May 7, Proposition 1 would have replaced city regulations with a new ordinance written by Uber and Lyft representatives.

The companies have long maintained that their background checks are sufficiently stringent. The fingerprint checks—conducted by the city—are burdensome and costly, making it more difficult to recruit drivers, the companies have said.

The two companies have pulled their operations from the city following the proposal’s defeat, a spokesman for the city confirmed to Bloomberg BNA in a May 9 e-mail.

Approval of the proposition would have in effect put the brakes on a city ordinance that requires fingerprinting as part of criminal background checks. The ordinance applies to any new driver operating for a transportation network company, such as Uber, Lyft or Dallas-based Get Me, which still operates in the Austin market.

Austin Mayor Steve Adler issued a statement May 9 saying the city remains “open to talking with Lyft and Uber whether they are operating in Austin or not.”

Lyft Laments Leaving

In a statement issued in response to the vote, Lyft expressed a desire to stay in the city, calling the pairing of the company and Austin a “perfect match.” It added, however, that rules taken up by the city made envisioning a way forward too difficult to justify continued operations.

“Unfortunately, the rules passed by City Council don’t allow true ride sharing to operate. Instead, they make it harder for part-time drivers, the heart of Lyft’s peer-to-peer model, to get on the road and harder for passengers to get a ride,” the statement said.

“Because of this, we have to take a stand for a long-term path forward that lets ride-sharing continue to grow across the country, and will pause operations in Austin,” the company said.

Following the vote, a top Texas state senator indicated the debate surrounding the regulation of Lyft and Uber could be taken up at the state level.

“Texas’ ride-sharing companies can no longer operate effectively through a patchwork of inconsistent and anti-competitive regulations,” said state Sen. Charles Schwertner (R), who serves as chairman of the Senate Committee on Health and Human Services.

Responding to a question on the prospect of Texas lawmakers taking up action on the ride-share economy, Adler told Bloomberg BNA in a May 9 e-mail that he is optimistic about the city’s capacity for providing a blueprint for tackling challenges posed by business innovations.

“I hope Austin will help develop some new and innovative options for the legislature to consider when it deals with the intersection of new emerging economic models and government's responsibilities for public safety and other vital priorities,” he said.

Texas Business Group: Surprised, Disappointed

A representative of the Texas Association of Business, the state's largest business advocacy group, said he was “surprised” and “disappointed” by the outcome at the polls.

“People who voted against the ordinance, I guess appeared to be buying into the argument that this was some sort of corporate bullying initiative as opposed to what I think this should have been about,” Stephen Minick, TAB vice president of governmental affairs, told Bloomberg BNA.

Supporting the posture taken by Uber and Lyft, Minick said the association isn’t anti-regulation, but there is a need for consistency, fairness “and the minimum required” to actually accomplish the desired purpose of the Austin regulation.

“I think the public doesn’t appreciate that Uber is operating in hundreds of cities and has a plan to expand to thousands of cities,” said Minick. “The problem is that every different city can’t adopt a different type or body or nature of regulation. It becomes a nightmare for companies to function uniformly. And so we do feel it was appropriate for them to draw a line.”

To contact the reporter on this story: Paul Stinson in Austin at pstinson@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Request Labor & Employment on Bloomberg Law