Uber Under Fire in Hawaii

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glenn-wakai-uberHawaii lawmakers are mulling a bill that would regulate “transportation network companies” like Uber and Lyft. And while the legislator who introduced the bill, Sen. Glenn Wakai, says he introduced it on behalf of Uber, Uber testified against the proposed law. [Update: See below.]

The bill also assigns the Public Utilities Commission the role of regulator, an assignment the PUC says “raises some concerns.”

Senate Bill 1280 sets Uber and its app-powered kin apart from taxi services, establishes requirements for insurance, and sets standards for drivers and vehicles, among other things. It would prevent transportation network companies from operating in Hawaii without first securing a $5,000 permit.

Brian Hughes, Associate General Manager at Uber in Hawaii, testified that the proposed law “places unnecessary and burdensome requirements on Transportation Network Companies here in Hawaii.”

Hughes points out that the insurance requirement set by SB1280 are more strict than the requirements established for taxi operators.

Meanwhile, newly appointed PUC Chair Randy Iwase points out that companies like Uber and Lyft “engage in similar activities and provide similar services as taxicabs,” which are regulated at the county level. He added that “some of the requirements that the Commission would be tasked with verifying are unlike anything the Commission currently oversees.”

Iwase outlined some of the tasks the bill assigns to the PUC, noting that “the Commission will need additional staffing and funding to develop the administrative rules, personnel, and practices to meaningfully enforce this chapter.”

Despite these concerns — raised by both the supposed beneficiary of the law and the agency expected to enforce it — SB1280 was passed by both the Committee on Commerce and Consumer Protection and the Committee on Transportation last month, and made it through the critical Committee on Ways and Means yesterday.

Its passage prompted Uber’s local managers to urge users to “Speak Up, Save Uber Hawaii,” and to launch a #HawaiiNeedsUber hashtag campaign. Not surprisingly, supporters don’t see SB1280 as helping these disruptive transportation companies, but rather an attempt to kill them… driven by entrenched and outdated taxi companies.

“Let’s face it,” tweets Richard Padilla. “Frank Delima and that cab company just aren’t that modern anymore and cab experiences are terrible.”

Tara Coomans adds, “Let’s make innovation and self employment easier in Hawaii, not harder.” Her comment echoes testimony from Hughes, saying, “we are offering entrepreneurial opportunities for thousands of people with flexible hours… parents whose kids are in school, transitioning veterans, people in between jobs and entrepreneurs saving up while they work on their dream.”

“Uber is not opposed to regulations,” writes Hughes. “In fact, we are strongly in favor of a new framework that would recognize unique aspects of TNCs and create a new solution that embraces this technology.”

To be sure, the bill has its supporters. Most of the testimony in support of SB1280 comes from insurance companies (GEICO, USAA, State Farm, Liberty Mutual). They don’t dislike Uber so much as “coverage gaps” that they say exist between a driver’s personal insurance policy and a business insurance policy, or the lack of clarity in defining when a driver is working or not (is it when the app is launched, when a ride is accepted, or when a passenger is picked up?).

But Uber definitely has its critics. The most passionate testimony came from David Jung, General Manager of Eco Cab.

“Uber, high on venture capitalist steroid (money), has become the school yard bully on a national scale,” Jung writes. “Their meteoric valuation has led them to feel that they’re above the law.”

He concludes: “I hope that our legislators and leaders have the intestinal fortitude to ‘dare’ go against such a powerful mainland interest, and the integrity to put Hawaii’s public safety over politics and money.”

UPDATE: Sen. Wakai responded to my tweet expressing surprise that he introduced SB1280 to help Uber, given the company’s testimony in opposition. He says: “They gave me the language for the original bill. Lots more to discuss before people get too excited.”

Uber Hawaii Team

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20 Responses

  1. Tara Coomans says:

    Thanks for a well written article (and for including my tweet). I’m particularly intrigued and hopeful by your update from Senator Wakai.

  2. Just Aguy says:

    #HawaiiNeedsUber is Astroturf Scare Tactics by Uber_Hawaii! Whenever a local ordinance or a state Bill is introduced that imposes even semi-adequate insurance requirements, Uber promptly starts an Astroturf #xxxNeedsUber campaign to pressure lawmakers into further watering down the insurance requirements.

    Uber provides primary insurance from the time a driver accepts a ride till the time that ride is finished. But it provides NO Insurance coverage during the time a driver is logged in and awaiting a ride request. This period has come to be known as the “Insurance Gap Period”. During the Gap Period, Uber Drivers are expected to rely on their Personal Auto Insurance policies for coverage. But Personal Auto Insurance policies explicitly exclude coverage for “Vehicle For Hire” activity. So a Driver has No valid coverage during the Gap Period.
    Drivers who understand Uber’s muddled Insurance, fully support regulations that require Uber to provide primary insurance coverage during the Gap Period.
    http://uberpeople.net/threads/hawaii-tnc-bill-leaves-drivers-in-gap-insurance-catch-22.15317/#post-205272

  3. Melissa Kim says:

    Interesting update by Senator Wakai. I sincerely hope Uber and Lyft are here to stay.

  4. Keoni says:

    Great article. It makes sense to me if the commercial insurance only comes into play the moment commercial activity takes place – ie, the first time the driver could make money by being connected with a rider

    I’m no insurance expert, but the stuff in Section 8 has changed alot across the different versions of SB1280 that keep coming out.

    I hate how local taxi dispatch companies try to paint Uber and Lyft as big mainland companies without locals- Last time I checked, every driver using Uber and Lyft lives here on Oahu (or maui). Those are the people truly affected by this bill.

    And to answer “Just Aguy” — there’s contingent coverage during the time a driver is logged in and awaiting a ride request… so you’re basically just lying. There’s no gap, period.

  5. imaube says:

    The bill passed in both the Senate and the House… Now what Uber?

  6. Uber Forum says:

    Uber will continue to dominate the Hawaii market. Although the lawmakers are out for their take, uber has a lot of muster. Things will work out in the end.

  7. Jeff says:

    What people are missing entirely is how Uber is mistreating and deceiving its “contractors.” Look into what the operating costs are for drivers, deduct this along with the paltry amount that Uber pays out and the impossibly low rates Uber charges and it become immediately apparent that drivers are being conned into essentially covering Uber’s operating costs with barely enough left over for a meal. The Uber POOL option is especially scandalous as it pays well below minimum wage after factoring costs. And the insurance issue is another elephant in the room. In most states there is no insurance policy for Uber drivers. This means that Uber has long been lying to its drivers and prospective recruits. With the lies and paltry payouts how long will it be before drivers begin to default on car loans when they can’t make enough to make payments – unless they’re driving upwards of fifteen hours a day and putting between 80-200,000 miles a year on their cars (thereby obliterating the value completely and racking up costly maintenance charges), which more and more drivers are doing (or simply quitting and taking jobs at WalMart that pay better). Do you really want to be getting in an Uber with a driver in his/her 15th hour on the road?

  8. The Drivers realize that it is no piece of cake to run a Independent Contractor Transportation Business.
    This is not for everyone to feed off of in this case and unfairly for that matter. I’ve had to attempt to go into other business ventures which require more expertise. There are Taxi’s with the Professionalism that require years of training and experience. Our Industry is being undervalued by inexperience for money reasons and they know where I’m coming from.

  9. Ken says:

    Uber doesn’t pay Hawaii taxes and fees. Recent cases say that internet companies like Expedia must pay Hawaii taxes. Uber drivers, if not regulated, likely wont pay them either. There is no way to check. To be fair maybe the taxis should be exempt from paying too. Also what about the companies that pay the State for airport pickup while Uber does not. Doesn’t seem fair.

  10. Jeff says:

    Uber drivers have to pay a 14.5% self-employment tax. Uber and other tech companies have been getting away with dodging taxes for quite some time but the low folks on the totem most certainly have not – and will not.

  11. Ken says:

    How does the State know who these Uber drivers are? Uber wont even state how many drivers are here. Will Uber report all its drivers to the State and say how much each made?

  12. Jeff says:

    That’s a good question. However, it’s not wise to risk an audit. Also, if you don’t declare income and the fact of driving for Uber when the class action suits are settled drivers would miss out on the payments.

    Screw with Uber al you want but it’s NEVER a good idea to screw with the IRS.

  13. andrew says:

    The easiest way to kill a competition is to use political power to either remove the competitors or to raise the cost for competitors by using regulations. Such regulations are of course pushed by companies such as taxi companies that like to spend their resources to kill competition rather than improve their own service. In addition, politicians that see the revenue of their past and future donors will have to protect them or else they may not get elected when the campaign contribution dries up.

  14. Ken says:

    I wonder how much the taxi companies and Uber are contributing to these politicians? The issue was tabled so there is plenty time to grease palms.

  15. Jeff says:

    Andrew, that was a bunch of utter nonsense. First of all, cab companies are heavily regulated whereas Uber and Lyft are barely regulated at all. In order for your opinion (which is based purely on speculation) to be valid cab companies would have to have all regulatory barriers removed to level the playing field.

    What’s more is that even though Uber and Lyft are unregulated they continually prove that they can’t be trusted to behave ethically when left to their own devices. Both companies, but Uber in particular, lie about virtually every aspect of the job in efforts to sucker new drivers. If the job was as great as these companies claim the churn rates wouldn’t be so astronomically high.

    The behavior or these companies totally disproves your arguments. Without caps on wages (excepting only NYC where the TNC will not allow any transportation service to operate below a fixed rate) these companies continue to engage in a “race to the bottom” with their scorched earth/trench warfare economic strategies.

    The fact is (and every precedent proves it) that when you fix wages at a livable standard it improves the economy overall. It also forces businesses to compete on quality and safety instead of price. When the only think companies can compete on is price they have clearly run out of innovative ideas.

    Sorry, but you’re wrong. Very much so.

  16. Jeff says:

    Well, cabbies are represented by a union so there’s definitely contributions coming from that sector. But, cab companies are private entities who fought against the unionization of the drivers, so there’s that dynamic to consider as well. As for Uber, in California alone they dole out $1 mil on lobbyists every year (with that number growing), which doesn’t even factor what they pay legal teams to tie everything up in the courts. ALSO, Uber hired David Plouffe (Obama’s former campaign strategist) and that has obviously helped them to grease numerous palms in political circles.

    Thing is that if you’re gonna regulate cabs you have to regulate Uber equally. Or deregulate everyone. Gee, what could possibly go wrong there?

  17. James Hill says:

    There are many issues that Uber and Lyft should address the issues. The most important part is the safety of the passengers. The traditional taxi operators comply with all the safety precautions. Competition are good but it should be fair.

  18. Jeff says:

    I’m getting pretty tired of hearing about this lopsided obsession with rider safety when the reality is that the drivers are the ones most at risk by a massive margin:
    http://www.bls.gov/iif/oshwc/cfar0020.pdf

  19. JH says:

    i really value UBER. It has allowed me to make some extra money and keep my bank account in the black. Prior to driving for UBER my account would be in the red and all i eat is white rice. Now I am able to save a little of my income.

  1. March 7, 2015

    […] “Hawaii lawmakers are mulling a bill that would regulate ‘transportation network companies’ like Uber and Lyft. And while the legislator who introduced the bill, Sen. Glenn Wakai, says he introduced it on behalf of Uber, Uber testified against the proposed law.” It’s a story of innovation versus the status quo. And the status quo is fighting to win. […]

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