This opposition is based on recent amendments that prohibit local agencies from requiring drivers associated with transportation network companies (TNCs) to obtain a business license to operate unless it is the location where they live. On May 9, SB 182 passed the Senate Judiciary Committee, over the objections of its Chair, Sen. Hannah Beth Jackson (D-Santa Barbara), who maintained that the bill “is not cooked.” The senator is correct; it’s not.
The League initially held off in taking a position on SB 182 so that discussions could be held with the sponsors who were seeking additional regulatory clarity for TNC drivers on how to comply with local business license requirements, especially in those locations where a driver may only be operating for a small portion of the time. While no examples have been provided of drivers facing multiple licensing requirements, sponsors communicated their concern that drivers, who are often part-time, could face such requirements in the future. It has become clear given recent amendments that the sponsors’ objectives are now at odds with those of local government.
The League’s starting point for this discussion is that a local business license must have a nexus with business activity within that jurisdiction. For example, San Francisco has over 20,000 TNC drivers registered for business licenses. If a TNC driver works primarily in San Francisco, they clearly should have a business license in that city. The remaining policy question is to what extent should business licenses be required to reflect activity in surrounding jurisdictions? Since TNC companies have locational data on every pick up and drop off, a system could certainly be devised to clarify this area of law, including the concept of apportioning licensing requirements and revenue based on varied levels of business activity.
As amended, however, the requirements in SB 182 have lost all connection to nexus. It now requires TNC drivers to only be licensed in the city or county where they live. This makes no sense. A driver could happen to live in Vacaville, but work in San Francisco driving 60 hours per week. In this instance Vacaville would have little nexus to levy a local business tax; San Francisco, however, clearly would, but would be prohibited by the bill from doing so.
The League is also concerned about the precedents in the bill and how they could affect other local licensing authority. Legislators should vote “No” on the bill in its current form, so that solutions can be developed that more appropriately balance the challenges of this emerging industry with the authority of local agencies to appropriately license business activity within their jurisdictions. Cities are encouraged to submit letters of opposition.
A copy of the League’s letter and a sample letter can be found at www.cacities.org/billsearch by plugging AB 182 into the search function.