technology

ADA Compliance and Transportation offered via Web-Based Booking Engines

In the old days in New York City, if you wanted private for-hire ground transportation, all you had to call was call a car service call center. Some had easy to remember telephone numbers and others you could reach by calling the 311 operator or by utilizing the telephone book. With the advent and proliferation of the internet, most transportation entitles created websites by which to advertise their services. Rapid advances in technology made booking transportation over the telephone a bit outdated and time consuming. Transportation entities then started to integrate their website with a booking engine/booking platform by which people seeking transportation for-hire could check availability and costs and make bookings at lightning speed. Offering a great user experience online became the new expectation. Despite the advent of the smartphone application by which to book transportation for-hire, many car services still provide the public with the ability book private transportation on their websites.  

The ADA was enacted in 1990 to prohibit discrimination and ensure equal opportunity to people with disabilities. This applies to State and local government services, employment, commercial facilities, transportation, and places of public accommodation, which are essentially private entities that affect commerce.  These laws can be enforced by the Department of Justice (“DOJ”) and through private lawsuits. An unresolved legal issue has recently arisen which has led to uncertainty in the law. Uncertainty in the law almost always leads to costly litigation because a company does not clearly know what its legal obligations are. People with disabilities should be able to easily access the Internet, but to accomplish this, the DOJ should have issued regulations. It issued regulations for State and local governments to know what it must do to become compliant with the law, but the DOJ did not issue regulations that would apply to private business.

The lack of regulations has led to the absolute worst-case scenario. People with disabilities have not been served since most companies are unaware this is an issue. Most companies do not even realize this is a problem to consider and resolve until they receive a demand letter from a lawyer or are served with a lawsuit. This leads to a scramble to get compliant. Unfortunately, it can take up to a year to do so depending on the complexity of the website. Transportation companies have relatively complicated websites because customers are presented not just with information about the company, but are provided with a customized web reservation site that is often an extension of main website. Private, customized portals are often created for corporate accounts or large groups. These portals can also accept marketing and/or promotional codes helping to increase both customer loyalty and reservation volume.

At present, a company website that is purely informational or educational in nature is likely beyond the ADA’s accessibility requirements. But a website that sells goods or services directly to the public may be regarded either as a sales or service establishment in its own right, or as a service of such an establishment, and thus covered by the ADA. On the whole, it is hard to argue that a car service that provides a website booking engine by which the public can utilize to arrange for transportation does not engage in some form of commercial activity. Thus, it is safe to assume that car service websites are subject to the ADA. 

The most common allegation in a Website Accessibility Lawsuit is that the company website is inaccessible to visually-impaired customers (some cases now involve mobile apps). Such customers often rely on screen-reader software like JAWS or NVDA to interact with and access a site's content. If the website is not compatible with this or similar screen-reader technology, most visually-impaired customers will not be able to use the website.

Meanwhile, plaintiffs’ attorneys across the country are taking advantage of the confusion. More than 260 website accessibility lawsuits were filed in 2016, and significantly more were filed by the end of 2017. But these numbers do not even begin to cover the cases that are settled pre-litigation. 

As stated above, the DOJ has not issued regulations that apply to private businesses and the law remains unclear because there is a split among the federal courts as to whether the statute applies only to physical structures. According to the more narrow interpretation adopted by several courts outside of New York, a disabled person is entitled to the “full and equal enjoyment” of goods and services only if they are offered at a physical location. Thus, if a business operates exclusively through the internet, without any physical location where customers interact with the business, the ADA’s mandate for accessibility does not apply. Most transportation companies in New York have an office, but they do not offer their services at a physical location where a member of the public can come to book transportation for-hire. The below is just a short indication of how the courts have been ruling on this issue. It has not been uniform and certainly not favorable to businesses in New York.

In 2017, defendant Bang & Olufsen obtained a dismissal in a Florida court because the plaintiff failed to establish a nexus between the company website and its physical locations. In California, a judge dismissed a website accessibility suit against Dominoes, finding that the company had met its ADA obligations by providing a 24-hour toll-free phone line to assist visually-impaired customers. The judge further ruled that to require website accessibility without meaningful administrative guidance would violate Dominoes' due process rights. Yet three months later, another judge in the same federal district ruled otherwise in a case involving Hobby Lobby. Similarly, in the October 2017 Dave & Buster case, the court recognized that providing a disability assistance telephone number may be an alternative means to comply with the ADA, but the court refused to dismiss the lawsuit, in part because it was unclear if the ADA notice and phone number itself were accessible (i.e., could be read via screen-reader software).

On the other hand, the New York Court have been quite favorable to plaintiffs. In July, 2017, the U.S. District Court for the Southern District of New York in Marett v. Five Guys Enterprises, issued a decision directly speaking to the applicability of Title III of the ADA (Title III) to websites, denying Five Guys’ motion to dismiss, and holding that Title III does indeed apply to websites.  Facing a class action lawsuit brought by serial plaintiff, Lucia Marett, Five Guys sought to dismiss the claim that its website (which, among other things, allows customers to order food online for delivery or pick up at its brick and mortar stores) violated Title III and related state/local statutes because it is inaccessible to the blind, on the grounds that Title III does not apply to websites and, even if it did, the case was moot because Five Guys was in the process of updating its website to provide accessibility.  The Court rejected Five Guys’ arguments.  Citing both the text and the broad and sweeping purpose of the ADA, the Court held that Title III applies to websites – either as its own place of public accommodation or as a result of its close relationship as a service of Five Guys’ restaurants (which the court noted are indisputably public accommodations under Title III).  Further, the court was unmoved by Five Guys’ ongoing efforts to make its website accessible because they had yet to successfully do so and there was no absolutely clear assurance that further accessibility issues would be avoided. 

In August 2017, Judge Weinstein of the Eastern District of New York denied retailer Blick Art Materials' motion to dismiss a website accessibility lawsuit under the ADA. The court found that Blick's website was subject to the ADA, even for the goods and services that it sold independently of any physical retail location. The judge rejected Blick's arguments that the court should wait for DOJ guidance on a technical website accessibility standard, and that it would violate Blick's due process rights to require its website to comply with the ADA without any administrative standards or regulations. 

It seems clear that many of the courts that have considered these issues have been unsympathetic to businesses, and plaintiffs are taking advantage of the reality that many businesses are unaware of their obligations under the ADA and do not have fully accessible websites. Website accessibility lawsuits are proving to be challenging to defend and expensive to resolve. If a court finds that a website is inaccessible, it can order the business to make its website accessible and to pay the plaintiff’s attorneys’ fees, costs, and expenses. Additionally, in certain jurisdictions, the court can order the business to pay the plaintiff monetary damages and/or civil penalties under state and/or local law. Many courts and the DOJ have viewed the privately developed Web Content Accessibility Guidelines (WCAG) 2.0, Level AA, as the de facto standard for ADA compliance. Accordingly, transportation entities who offer a web booking engine to their customers should consider reconstructing or redesigning their websites in compliance with this standard. Even if a business successfully defends such a claim, the expense of litigation may exceed the cost of compliance.

 The good news is that the United States House of Representatives recently passed a bill aimed at stemming the floodgate of ADA lawsuits brought by a small number of serial plaintiffs. The bill, the ADA Education and Reform Act of 2017 (H.R. 620) would impose a notice requirement and would allow businesses a grace period to cure alleged accessibility barriers before a lawsuit could be filed. Although not specifically aimed at particular type of ADA lawsuit, the reforms in the bill may provide relief from the large number of website accessibility lawsuits filed over the past few years. The bill will now move to the Senate. Regardless of whether the bill ultimately become law, it reflects a growing acknowledgement that private lawsuits under the ADA have reached a critical mass and until certain reforms are enacted to limit attorney driven suits, it is important for all businesses to understand the need for ADA compliance and the pitfalls posed by non-compliance.

 

 

 

 

 

 

A New Synergy Between Automakers and TNCs

Automakers are in a complex relation­ship with Transportation Network Companies (“TNC’s”) such as Lyft and Uber. In a way, Uber and Lyft and Uber are both competitors and customers. The Uber and Lyft of today do not own vehicles. Their driver’s own them and in the short run, auto man­ufacturers will likely start producing customized vehicles for TNC drivers. In the long run or as soon as the level-5 driverless cars come on the scene, Uber and Lyft may have no choice but to go into the auto manufacturing business.

The Uber and Lyft of today are a quasi-technology company and quasi transportation service provider. They are not one to the exclusion of the other. The transportation industry, as far as the transportation of persons by ground involves 3 parties: the driver, the customer/passenger and the 3rd party intermediary that puts them together. Once the autonomous vehicle takes the driver out of the picture, Uber and Lyft will have no choice but to embrace a new business model that involves ownership of vehicles

Owning and operating a fleet of automated vehicles is vastly different from operating an app-based demand-responsive company that facilitates transportation of persons. Technological advances in transportation have made it inevitable for Motor City to move into Silicon Valley, just as the power of fleet ownership will force TNCs into partnership with vehicle manufacturers.

TNC’s are well on their way to making their vehicles more “passenger centric” by creating a com­fortable and seamless passenger experience — as opposed to today’s driver-centric vehicles. Passengers do not have to concentrate on driving and as such, there will be an increased focus on entertainment, infotainment and connectivity within existing vehicles. This effect of vehicles being more passenger centric will become even more pronounced when we have driverless vehicles. TV, audio, media, video games, video conferencing and high-speed Internet will become more commonplace.

The auto manufacturing industry is already working on the autonomous vehicle, which may place them in a better position to create their own ride-hailing service. They have the experience with vehicle creation and ownership and Uber has shown the world the way to creating a ride-hailing service for on demand ground transportation. But why would big auto create its own ride hailing platform when they can partner with Uber or Lyft. The big auto manufacturers already have name recognition and capital to make the leap and the driverless vehicle will not embroil them in the never-ending saga of whether Uber’s drivers are employees or independent contractors. This is an issue that has the potential to cause Uber to implode, especially in California, its home state. The decision in Dynamex makes that potential crystal clear.

All this points toward an era of transition where automak­ers, TNCs, software companies and other innovators in media and infotainment, such as Vugo, will operate in cooperation and some competition simultaneously. Over the next 5-10 years, they will all fumble their way through a convoluted series of new partnerships and alliances.

Regardless of whether to own or manage a fleet of vehicles, administrators are going to use and monetize their assets to the fullest. That means doing more than just connecting passengers with vehicles. It means finding new ways to unlock hidden value based on the information, communications, processing capabilities and physical location of those assets and the customers that use these vehicles. The cumulative result will be a fundamental shift in the business model for existing manufac­turers and tech companies because a new business model is growing which involves the convergence of data consumption and advertising. The vast frontier of in vehicle advertising and infotainment will create new capabilities and business models that do not quite exist yet in the consumer-produced trans­portation system of today

When driverless vehicles arrive, they will dramatically lower the cost of conveying physical things and create more opportunities for integrating entertainment and advertising into the transportation experience. Inside passenger vehicles, entertainment and retail will turn into major revenue streams. More lucrative will be the ability to mone­tize the process of physically bringing people together through dynamic pooling. All these services will also act as a plat­form for data gathering — helping companies build more sophisticated customer profiles and better understand tastes and preferences which will help advertisers target audiences even better that google already does. Since we all use computers on a regular basis, google has a semi-captive audience. What could be more captive than taking a trip in a vehicle from point A to point B and having ads targeted to you based upon a variety of data driven factors. 

This new wave of creative destruction is likely to devastate traditional auto manufac­turing and is poised to disrupt the business of car services. At the same time, mobility is the perfect hedge. While the profits of auto manufacturing might stagnate, the total revenues in the mobility space might well dwarf anything that currently exists. That is why Big Auto and many others are already betting on mobility. Investments are already in the billions. The rising masses of mobility patrons will create an opportunity for proprietors at a scale the world has never seen. The repercussions for our society and labor sectors will be far-reaching. The proprietors of tomorrow will sell trips and services rather than horsepower, and those services will be delivered more efficiently than ever before. Patrons will consume these services in new configurations. Mobile com­puting and human-dependent transportation have been a toxic cocktail from a safety standpoint, leading to distracted driving and more frequent car crashes.

On the other hand, automakers may be more determined to stop the rush to automation and focus more on the software inside the vehicle because technology can be far more profitable than auto manufacturing making. Unless auto manufacturers are well positioned, they may discourage regulatory approvals of level-5 vehicles, or they could create roadblocks to their usage by having their army of lobbyists put the proverbial brakes on the movement towards automation.

Either way, there is great hope for the future. New technology and new consumer demands already have us on the road toward a more technologically dynamic, less environmen­tally destructive and safer transportation system. Getting there depends largely on policy leadership over the coming 5 to 10 years — and a willingness of societies to bid farewell to the past and embrace the future of technology. History has taught us that if you don’t embrace technological change, you will become the next Kodak.

Evolution of Transportation and Insurance and The Impact of Technology on The Future of Both (Innovation and Its implications upon Risk and Society)

It is quickly approaching: a world where we can get into a vehicle anytime and anywhere, but do not own it. It is a world where we are all passengers. Where we do not have to worry about dangerous drivers and accidents are drastically reduced due to the lack of human involvement. Where we can talk on the phone, review a report for a meeting, watch TV or do anything you want on your morning commute to work. Vehicles and vehicular transportation are changing drastically and quickly. While automakers and other stakeholders have invested an estimated $80 billion into autonomous vehicle technology, it remains unclear when this technology will achieve widespread consumer adoption. The when is up in the air, but the if is no longer in doubt.  Regardless of the precise timeline for its widespread adoption, it is clear that autonomous-vehicle (AV) technology will continue to improve safety and reduce risk. It is only a matter of when, not if it becomes ubiquitous.

Alongside the transformation of vehicles and differing modes of vehicular transportation, investment in autonomy, electric technology, and mobility services continues. The convergence of these three trends is set to transform how consumers and companies think about vehicles as they relate to rick, safety, and insurance. As the automobile is quickly evolving before our very eyes, we should take a moment to consider where we were, how we got here, where are we going and imagine the future possibilities.

Since the Ford Model T came off the production line in 1908 cars have been continuously evolving. Changes to vehicles over time have had the dual effect of not just improving driver experience, but has forced the automobile industry to balance innovation with safety. For example, in 1911 rear view mirrors were used for the first time. In 1921 the headrest was invented to reduce the harm caused by whiplash in rear-end collisions. 1947 saw the first car with padded dashboards, which was intended to minimize chest damage when hit head-on. In 1956, power steering became a standard feature for drivers which made maneuvering a vehicle more comfortable and improved safety. In 1958, cruise control improved user experience and paved the way for what will is the modern-day autonomous features. In 1963 the inertia-reel seatbelt was initiated by allowing the seatbelt to re-adjust to the preference of the passenger. In the US made it mandatory to have collapsible steering columns and side marker lights in all vehicles. In 1974, General Motors provided optional airbags for the driver and passenger’s seats. In 1978 the first electronic anti-lock braking system was introduced. 1981 saw the release of the first production car with supplemental restraint system airbags for the driver’s seat. By 1984, most vehicles came equipped with airbags. The 1990s saw an increasing amount of electronic systems being installed in vehicles. In 1994 side-impact airbags were introduced. In 1996 the Brake Assist System was introduced.

The turn of the century introduced new protection measures for pedestrians and development of computer technology continued. In 2000 the Lane Departure Warning System was developed. This technology which used audible, vibration  and visual warnings to alert the driver if they are leaving their lane. 2004 saw the introduction of the blind spot information system using cameras and motion sensors to avoid accidental collisions when the driver is parking or switching lanes. In 2010 the pedestrian detection system was first utilized, causing cars to brake automatically when they detect a pedestrian. It uses camera and radar technology to keep an eye out for other vehicles as well. Today, multiple safety features aided by computers are able to keep drivers from swerving out of a lane, backing up into another vehicle, running into a vehicle in front of us, flipping over, spinning out, or generally doing anything dumb. And if future predictions are correct, we can soon look forward to cars that will be able to drive themselves. There will not be an overnight change to driverless cars. Human drivers will continue to mix with autonomous vehicles on the road, and there will be various stages until we reach full autonomy. With the march of time, the modern-day automobile will support evolution until it eventually becomes fully automated.

It is best to consider AV capabilities along five levels. For example,  Level 0 means no autonomy; the human is at the wheel. Level 2 (partial automation) indicates the vehicle can steer, brake and accelerate under some circumstances. Level 3 (conditional automation) is when the vehicle can monitoring the environment as well as manage almost all driving functions. Under this technology, the driver will need to be available to take over if the vehicle confronts a situation it is not programmed to handle. Level 4 (High Autonomy) is when the vehicle can operate without human input under select conditions such as geographic area and road type. Level 5 (Full Autonomy) is where a destination is entered, but the AV operates on in any conditions and on any road than a human driver could negotiate. While full adoption of Level 5 vehicles may be some way off, onboard computers will increasingly take over, particularly for city driving. 

With these onboard computers, vehicles will become more proficient at communicating with one another and control centers will harness data to improve safety and traffic flow. Wireless technology will allow each vehicle to broadcast their position and speed to nearby cars. This will let each vehicle understand their surroundings, better identify potential perils, and determine possible corrective actions to take if such a hazard occurs. Also, communication with control centers will allow cars to broadcast their location and receive the areas of other vehicles, thus allowing the vehicle to choose a route with less traffic, which would speed up travel times and decreasing the risk of accidents.

Much of the potentialities around the AV is their potential to reduce fatalities on the road dramatically. The National Highway Traffic Safety Administration estimates that 94 percent of the estimated 2.2 million crashes in 2015 were the result of driver error, 2 percent were due to the environment, and the remaining 4 percent were due to unknown reasons/causes. The number of accidents through driver fault will continue to drastically decrease as vehicles become more autonomous. If a car accident occurs today the fault usually on the driver. With AV’s, in the future more of the liability will fall on the technology and manufacturer of the vehicle. Not coincidentally, it is estimated that as the number of autonomous vehicles increases, the number of motor vehicle accidents is anticipated to decrease substantially. Less motor vehicle accidents translates in fewer insurance claims. This should increase the insurability of highly autonomous cars. As a result of the increasing use of telematics and black-box technology, the cause of the motor vehicle crashes will be easier to determine. Onboard technologies will bring much more certainty in determining each vehicle’s contribution to a crash event. This can considerably accelerate insurance claim resolution and reduce unnecessary legal costs.

Connected cars will collect massive amounts of data. The frequent use of advanced driver assistance systems will grow exponentially and the evaluation of such data will significantly increase the knowledge and understanding of an insurance carrier's risk.  If the 94 percent of accidents are related to human error, if you take the human out of the equation, the advancement of autonomous technology will then cause the risk to insurance carriers to decrease. This should cause insurance premiums to be reduced over time. Although it remains unclear when the AV will achieve mass adoption, the risk will inevitably shift dramatically. AV’s that take human motorists out of the equation entirely will result in fewer traffic accidents. As such, the switch to autonomous vehicles is likely to alter our lives in remarkable ways. While technology continues to evolve, making accidents far less likely, an accident can still happen. But the risk of serious injury is far lower than it used to be thanks to the introduction of several safety features since the Model T was introduced. The advanced driver assistance system is the culmination of over a century of innovation in safety features.

AVs also have the potential to overturn more than a century of not just vehicle design but urban planning as well. The possibilities include connecting vehicles wirelessly to share information on roads, setting up electricity grids that manage energy supply and demand, impose real-time pricing and travel-on-demand services that give people greater flexibility. All this can reduce the cost of transportation. Self-driving cars will also enable vehicles to travel closer together, which would cut down on traffic congestion. The impact of the AV will be profound and impact almost every part of our lives.

A driverless future, based on increasing technological advances, may very well lead to the following:

1. People will not own vehicles. Transportation will be provided as a service from companies who own fleets of AVs;

2. Technology companies will hold more of the world’s economy as companies like Amazon, Google, Facebook will turn transportation into a pay-as-you-go service. These companies may own the world. Over time, they will own so much data about people, repetitions, obstructions and routes that new entrants will have insurmountable barriers to enter the market;

3. Parking lots and parking spaces on roads or in buildings will become unnecessary;

4. Local auto mechanics, car dealers, car washes, auto parts stores and gas stations will be unwarranted;

5. Gas will become much less valuable as electric cars replace fuel powered vehicles;

6. The same vehicles that transport people will start to transport goods as well. We already see this with companies as Uber and Uber eats.  Computer algorithms will optimize routes of travel;

7. AVs will need much less space between which will allow traffic flow to be better regulated and will maximize infrastructure utilization;

8. The public will undoubtedly have less privacy as interior cameras, and usage logs will track when, where and how often you go somewhere;

9.  Litigation over car accidents will not be individuals vs. individuals but will be more likely be big company versus big company. Forced arbitration clauses will become a mandated component of the contractual relationship with transportation providers;

10. There is already talk of in-transit purchases such as food and merchandise;

11. Traffic accidents from human error will be no more, but non-malicious software and technical issues will likely be the leading cause of delays.  One of the most serious of issues will be the hacking of computer systems in AVs. This will significantly increase the need for cyber insurance;

12. AVs will likely be filled with advertising of all sorts which will decrease the cost of the ride, although there will probably be a way to pay more to have advertising-free travel experience;

13. Sensors of all kinds will be embedded in AVs that will have other ancillary uses such as improving weather forecasting, crime detection, and prevention, finding fugitives, infrastructure conditions. Of course, all this data will be monetized, likely by the companies who own the transportation services;

14. Google and Facebook will add everything about customer movements and locations to their massive databases. Unlike GPS chips that only tell them where someone is at the moment, AVs will know where you have been, where you are going and likely with whom.

There is little doubt that the widespread adoption of AV will have a massive impact on the automobile insurance industry. Since insuring privately owned vehicles is what the auto insurance industry is all about, insurers have every reason to be happy that the number and severity of accidents and insurance claims will drop. The widespread use of telematics and sensor data will lead to lower premiums as insurers learn to price by real risk. In a future where AVs are prevalent, auto insurers will change their way of thinking, their business models and will adapt to new realities of the risks involved. The speed of the evolution to an AV environment is impossible to predict, but insurance carriers are already starting to create actuarial models based upon real-time and actual driving data that better determine risk and pricing for different stages of autonomous vehicle evolution.  Many insurers already offer premium discounts for these features, but as the effects of increased safety become apparent, insurers will likely to lower premiums or risk being undercut by competitors. Other forms of artificial intelligence will be highly useful for insurers to fine-tune data collection. This new information will help price premiums better and provide more valuable services to customers instead of going the way of Kodak and Blockbuster.

Insurance carriers are developing new product offerings in areas including product liability for software and sensors. Market participants who collect, organize and analyze this data will have inherent advantages over those with less developed capabilities. Carriers can and should develop the needed actuarial framework and models.  We have already seen partially autonomous safety features such as automatic emergency braking systems change the safety profile of newer vehicles.  Insurers will likely use sophisticated actuarial and modeling techniques to be ready as vehicles add more and more autonomous features. Insurers will also probably be identifying and collaborating with ecosystem partners such as automakers, communication service providers and software systems.

Finally, carriers will think about new business models. Numerous aspects of the insurance industry will be impacted as the AV advances. Until the vehicle is fully autonomous, liability coverage will be mandated. Over time, as the vehicle advances to stage 5 autonomy,  the coverage will change, as manufacturers, suppliers and even municipalities are called upon to take responsibility for an accident. Self-driving cars raise complex questions for insurers. Answering those questions will take time. The industry has time to research and make changes accordingly. But the proverbial ball is in insurers’ courts to make the most of the next 5 to 10 years and shift their business models to accommodate the coming changes in technology. One day, human driving may not just become uncommon, but eventually illegal. Change is afoot to our vehicles, our roads, our modes of transport, our urban footprint, our way of thinking about transportation and our insurance processes. This is one journey consumers, and insurance companies should not want to navigate on autopilot.

By: Steven J. Shanker, Esq.

 

One day, Hopefully soon...Uber Will Have Its Day of Reckoning

What does an Uber ride actually cost? That simple question is often lost among the many controversies facing Uber, but it is surely one of the most important question of all when it comes to determining the value of Uber which has built its business on massive subsidies to both riders and drivers, producing huge losses in the process, and has yet to show that it can maintain growth without them.

Although a private company dos not need to release its financial data, Uber has started releasing limited financial data, and in May reported a loss of $708 million for the first quarter, down from $991 million in the fourth quarter. While their upcoming financial report may show further improvement on margins, Uber continues to spend heavily on subsidized rides.

The question vexing everyone is what the company is worth. Truthfully, I really don't care. Not just because I am anti-Uber but because their entire business model is based upon explanation of persons and creating the myth of providing jobs when their true intent is to totally divest itself, in due course, of all drivers. How drivers do not see this and continue to driver for them is beyond me. Maybe I am wrong in my forecast or perhaps I just simply do not like illegal monopolies.

Uber’s losses stem from its drive to win global market share at almost any cost. That strategy was built on the assumption that Uber could achieve a dominant position in many big cities quickly and eventually raise prices. Kalanick himself said low fares were temporary. But eight years in, the strategy is now in doubt as competition in many markets continues to intensify. Uber must solve the problem of how to eliminate subsidies without losing customers and thereby undercutting its valuation.

At some point in time, Uber will have its day of reckoning as they will eventually have to raise prices and get rid of driver subsidies. And we all know what happens when you raise prices - demand goes down. And when you give up driver subsidies - supply of drivers goes down.

Regardless of their Valuation, in my humble opinion, Uber has become an illegal monopoly. I have conducted my fair share of research on the Sherman Act and its progeny since the late 1800's when certain monopolies were declared illegal. Monopolies are bad for the public, bad for the economy and bad for competition. Uber will eventually raise its prices and do away with driver subsidies...and then the riding public will see Uber for what it truly is. Not an aid to the Salvation Army, but a money hungry technological monopoly that is built on a house of cards. When one of the cards start to fall, the others shall follow. Then I hope to see Kalanick himself driving around in his own vehicle with the stupid "U" in the front window.

Time for the Public to see Uber for What they Really Are.....and to go elsewhere

Uber’s global pattern of driver mistreatment, corporate bullying and legal transgressions should be tolerated no more.  For years, Uber managed to conceal its bad behavior with expensive P.R. campaigns and by claiming they are a technology company and not a transportation provider. Their games may have worked for a while, but their grand plan is quickly unraveling.

Uber is convenient and fast in New York City. The combination of cashless transactions and location technology make for a great service. But no amount of convenience can cover up the toxic culture that has taken hold at Uber. This hold true now not only in the treatment of its huge driver workforce, but at the company’s headquarters as well. Uber’s CEO has finally been forced to resign, but this is simply not enough.

We all know by now that Uber’s wrongdoing does not end at the door of its corporate headquarters. Just as evil is Uber’s model of “employment”. In my opinion, under New York law, Uber is an employer, but offers no employee benefits to its drivers and does not pay the taxing and regulatory costs associated with employing persons. In the vast majority of cases, Uber drivers are offered low pay, no sick pay, no vacations, no 401K. In return, they are promised “flexibility”, or the freedom to work whatever hours suit them. In practice, many Uber drivers are working long, long shifts for extremely poor pay in order to try to make ends meet. On the other hand, Uber continues to operate outside of the law with impunity.

Politicians are yet to condemn Uber. Perhaps their political contributions are just too large to refuse. I am at the point where I refuse to believe politicians will intervene and Uber is surely not going to change its business model on its own volition. But not using the app will surely send them a clear message. The consuming public needs to use its power as customers to force Uber to change their behavior. The workforce of drivers need to stand up to Uber and say “no more”, by disaffiliating with them and refusing to accept their dispatches.

 While Uber is convenient and fast in New York City due to their combination of cashless transactions and location technology, there are plenty of other car services in New York City that do the same exact thing. The only difference is that Uber operates outside of the law, while the car services that provide the same type of service in New York City have been in business for decades and know who to operate a transportation business. The consuming public and the drivers affiliated with Uber should use their collective power and go elsewhere. Uber is not going to change on its own, but you do have the power to “vote” by not using their service. Uber is no longer the sexy newcomer with a cool service. It is a lawless entity that uses drivers like slaves and laughs at the consuming public along the way. Why should anyone put up with this type of service. The time has come for the public to consider that Uber did force many of the incumbents in the industry in New York City to revolutionize and create their own technology to meet the demands of the public. It is now time to go back to these companies and use their service. You deserve better

The Gig Economy Is Here to Stay

Lets face it. The gig economy is here to stay. If it was not a good idea, then the entire market of new companies that have been created would not be flourishing…and they are not all flourishing because they are taking advantage of loopholes in the law. When something does not go the way they expect it, the layperson calls it a “loophole in the law”. When someone or some company escapes legal liability on a “technicality” the public calls it unfair. It is almost always an afterthought reaction when a group of persons file a class action lawsuit against a company alleging that the company misclassified them as independent contractors. Of course, they don’t seek “justice” by making the market reform to the existing laws and they don’t petition their elected leaders to change the law, but they seek the usual object of a lawsuit….MONEY (compensation for missed lunch breaks, minimum wage compensation, reimbursement for business expenses, and overtime, in addition to other penalties). While a lawsuit and the payment of money may have the unintended result of making a company reform its business practices, the current wave of class action lawsuits will not change an entire industry that has been created in the past 5-6 years.

Lawsuits against companies utilizing the “gig economy” are like a threatening cloud in a brewing storm. People who provide services surely deserve respect, fair treatment, and open communication, but that does not mean that all persons who provide services are employees, as opposed to independent contractors. Yes, there surely are many companies that misclassify their workers as independent contractors as opposed to employees in order to avoid the legal and financial liabilities associated with hiring an employee. But there are also many who follow the law and do utilize independent contractors, but still have to navigate the legal maze of bottom feeding lawyers that seek out these class action lawsuits, not to reform an industry or a market, but to get money.      

This rising legal retribution is a huge threat to the gig economy. Not being responsible for employees’ taxes and benefits allows companies to operate with 20% to 30% less in labor costs than the incumbent competition. If they lose this workforce structure either via class-action lawsuits or intervention by regulators, or through the collective action of disgruntled workers, and you will surely lose the gig economy.

The lawmakers may need to alter the very definition of “employee” in order to meet the demands of the in a tech-enabled, service-driven economy in the 21st century American Gig economy. Many companies do not own cars, hotels, or even their workers’ cleaning supplies. What they own is a marketplace with two sides. On one side are people who need a job done–a ride to the airport, a clean house, a lunchtime delivery. On the other are people who are willing to do that job. In the middle is a broker. This is the one that puts the two parties together and takes a “piece of the action”. Little or no direction and control over the means by which a person provides their service is the legal equivalent of an independent contractor. If you don’t like being an independent contractor, then go out and get a job as an employee, which involves more supervision, more direction and less autonomy. There is nothing wrong with that, but just don’t complain later on that you were cheated after you speak to a scum sucking ambulance chaser.

Some say a new deal has to be worked out and one that squares the legal rules governing work with new products and new services. Some believe the gig economy created a marketplace where people who provide services do not fit neatly into the traditional definition of employee or independent contractor. Right now, one who provides services is not sure what benefits to expect from a quasi-employer. For those who want to know, all you have to do is ask. If you don’t like the answer, then don’t accept the job or don’t provide the service. I believe one can be both independent and tethered to an app-based company. The social contract between gig economy workers and employers may be outdated, but it is far from broken. Who will fix it, and how, will determine the fate of many thousands of workers and billions of dollars.

Thanks to these new on-demand startups, though, whether you’re a stay-at-home mom with a few odd hours to spare or a recently unemployed fast-food worker who needs to make ends meet while looking for a job, you can work whenever you want, doing whatever you want. Many like the flexibility and feel like it gives them a better work and life balance. In the gig economy, you’re better than an employee; you’re a little business. We now live in a world where people can be entrepreneurs or micro-entrepreneurs, Just like the government didn’t begin to regulate the Internet before it became a behemoth, regulating this new economy before it’s fully created could halt innovation. Perhaps I just don’t have much faith in regulators whose job is not to ensure a properly working system, but to regulate for the sake of regulation by implementing more and more rules of operation to the point of choking a business to death. Just like the New York City Taxi and Limousine Commission did to the for-hire vehicle industry in New York City.

 

I believe the gig economy has been improperly interpreted as a loophole for avoiding labor laws. There is little economic security or predictability in being an independent contractor, but then again, there is the promise of starting off with your own small entity and creating something new and ever bigger and better than before. If you want security and predictability, then go get a job teaching 4th grade in an elementary school. If you want to take a risk and be your own boss and possibly fulfill your dreams, then start your own business and make it rain…and don’t come complaining later when your own ideas and inventions don’t work out because it is not the fault anyone other than you and your own choices. Some don’t like the gig economy because there is no power among workers to get a fair share of the profits. For those who believe this, take a step back and realize that you don’t get the profits of a private company by being an employee or a person that provides services.  Many people try and fail to make money with gig economy jobs, and then complain that their legal rights were violated. Why did they not think of this when they signed on to be an independent contractor in the first place

It’s safe to say that there are advantages to being an employee (security, safety laws, minimum wage, benefits) and that there are also advantages to being an independent contractor (freedom, independence, opportunity for more profit). Similarly, there are advantages to hiring employees (quality control, dependable workers) and hiring contract workers (cheaper, don’t need to guarantee work). Where platforms and new markets get into legally dubious territory is when they try to claim the advantages of both systems at the same time. But just remember that simply because you utilize the platform of another company does not mean that you don’t have control over the work you did. If the company that provided the platform or means to access the marketplace, then you would not have the option to be an independent contractor.

The laws that determine independent contractor and employee status vary from state to state and from situation to situation, but many of them focus on the question of how much control workers have over their work. If their employer is mainly focused on the outcome of that work, there’s a very good chance they’re fairly being classified as an independent contractor. When their employer begins to control not only what work they do, but how they do it, that classification gets murky. Giving persons suggestions for how to do their work should not made the company more vulnerable to a lawsuit. Similarly, though traditional taxi drivers are often independent workers rather than employees, a platform like Uber takes a certain amount of control when it fires them for low ratings or changes their fare prices. Some don’t like the idea of going into work one day and your “boss” telling you that you’re going to have to do the exact same job you did last week but make less money”. But ”firing” someone for low ratings does not necessarily make them an employee, it may just means that the company no longer desires to utilize their services.

Right now, our legal system only has two buckets for workers who aren’t volunteers or interns. You are an employee. Or you are an independent contractor. The risk of being sued has led many in the gig economy to place workers into the employee bucket. This also drives costs to the consumer up because the cost structure for these companies increases by about 30% by paying for taxes and benefits that they may not have to, but they just want to be cautious. Other companies in the gig economy place workers into the independent contractor bucket, which entails the risk of worker misclassification claims for disgruntled persons who formerly provided services and/or tax hungry governmental entities that have every intention of finding an employer-employee relationship so they can increase revenue for the city, state and/or federal government. The legal risk, the risk of being asked to pay back-taxes by the IRS or Department of Labor is a battle that everyone knows is coming and each entity that utilizes independent contractors should make budgetary preparations, emotional preparations and legal preparations to fight and defend.

The pressure in the marketplace right now is to push workers into one bucket or another (employees or independent contractors). This creates an inherent fear of the governmental fines if you are wrong and the fear of the cost of defending a class-action lawsuit where a group of former disgruntled persons allege that a company misclassified its workers. But on the other hand, classifying a person as an employee will raise the cost to consumers in many situations when the worker is not an employee and thus, the increased cost to the consumer for no good reason.

But some wonder if there is some room for compromise in this system. The question is whether there is some sort of a new middle ground that works for everybody. Forcing all companies to use these old constructs (employees or independent contractors) may not quite be the right thing for the worker and for the growth of the economy. After all, the answer to decreasing employment is not to get more people deemed as misclassified.

One answer, of course, is that the gig economy should be destroyed if it can’t follow existing labor laws. These legal protections have been put in place for the protection of workers and have evolved over a century and surely were not accidental. Others call for change where parts of the sharing economy could self-regulate, with oversight from the government. Others have supported creating a third category of worker that falls between an independent contractor and employee, which would allow companies to give their independent workers some benefits without fear of being sued for treating them as employees.

Lawsuits are a big, visible threat to the gig economy, but even if none are successful, there’s another, slower-burning problem that will corrode the gig economy if left unresolved. It’s a problem that gets worse every time a worker completes hundreds of jobs via a platform with nearly unanimous perfect reviews of his work, is let go and then the person becomes disgruntled and there is nothing that the company could ever do to win him back as a dedicated service provider.

In my humble opinion, the most important thing a corporation can do is to have an experienced lawyer perform a full exam of your corporation to see if it is properly classifying its workers/service providers. Do not wait until you are sued or the government performs an audit. By that time, it is too late to do anything other than damage control. The most important thing a person can do before they take a job, is to determine whether they will be classified as an employee or an independent contractor. Go into the job with your eyes wide open, knowing what your benefits and rights are based upon who you are being classified. Speak up and ask questions and make a fully informed decision before taking the job. Don’t cry the blues later on because you were fired and failed to do your homework before taking the job. Finally, the most important thing is what the government can and should do. This means to stop the audits and put aside the money grab for the moment. Take the time to involve leaders and stakeholders in each major industry that straddles the line between hiring employees and utilizing independent contractors. Figure out a way to make the line clearer for businesses and help them understand their potential legal liabilities all while another last option is pursued. That option is to bring the same leaders and stakeholders in each major industry together with the government regulators to figure out a way to find a middle ground that works for everybody. Utilizing old constructs of what it means to be an employee or an independent contractor will not work when analyzing the new gig economy. We have to come up with new constructs and figure out a way for the companies of the nation to know its legal rights and responsibilities all while giving the independent contractor some benefits that they ordinarily would not be entitled to under the current system.

There is middle ground and finding that middle ground will be a better solution for the worker, the business and the economy in general. To do otherwise is to be trapped by dogma, which is living life with the results of other people’s thinking. 

When will the Elected Leaders of the State and City of New York Learn from Its Past Mistakes?

During the 1920s and 1930s, easy entry into the taxi cab industry led to an oversupply of taxis, resulting in traffic congestion, fare-cutting wars, low driver wages and other unsafe and sometimes illegal activities. The Great Depression created an influx of unemployed workers which worsened these problems, with the number of cabs spiraling to 21,000 in 1931.

To address problems of oversupply, in 1937 the City of New York enacted the “Haas Act” (sponsored by City Alderman Lew Haas) in order to freeze the number of taxi medallions. In 1996, 2004 and 2006, the City auctioned off a total of 1450 medallions. Thus, by 2012 the total cap was set at 13,237. While being a passenger in a taxi was not always the most pleasant of experiences, it was just another option for the millions of New York City residents and the multi millions of City visitors to obtain transportation for-hire on demand. Of course, demand always exceeded the supply of available taxis. That is why the value of the yellow medallion soared from $10 in 1937 to approximately $1,000,000 (one million dollars) in 2012. The purchase of the yellow medallion was one the best, if not the best investment in the world. It also provided many immigrants with the ability to realize the “American Dream”.

While the yellow taxis have traditionally served those persons who live and seek transportation in Manhattan, the non-medallioned “livery” industry has always served the residents of the 4 outer boroughs of New York City. The residents of Brooklyn, Queens, the Bronx and Staten Island always had a reliable car service to call to obtain transportation by pre-arrangement. By 2012, the livery industry has some 38,000 licensed drivers in 23,000 vehicles that were affiliated with approximately 450 bases.

As far back as January 2011, Mayor Bloomberg first proposed allowing non-medallioned livery vehicles to accept street hails (i.e., a person standing on the street waving to vacant taxicabs to be picked up, as opposed to a trip pre-arranged by telephone or other means) outside of Manhattan. With the help of the Mayor Bloomberg and then TLC Commissioner Yassky, the State legislature created a law, later known as the “Street Hail Law” that allowed the Mayor to issue up to 2,000 new taxicab medallions and allowed the TLC to issue 18,000 “HAIL licenses,” valid for street hails outside the Manhattan Central Business District. Thus, the creation of the green taxicab. These granny apple green cabs were supposed to provide the residents of the 4 outer boroughs of New York City with more transportation options.

Those who had been heavily involved in the for-hire transportation industry and knew much more than the elected leaders in Albany about what was good and what was bad for the transportation industry in New York City were essentially ignored. The leaders of the taxi and livery industry knew that the Mayor’s proposal and the state’s new law was a bad idea and vigorously fought it all the way to the New York Court of Appeals, New York State’s highest court. The Court of Appeals upheld the law as it is required to give great deference to enactments of the State Legislature when it comes to matters of health, safety and welfare of its citizens. Of course, transportation always involves the health, safety and welfare of the citizens of New York State and New York City.

On the implicit promise from the City of New York that these green cabs would be money makers, similar to the yellow medallions, and because the City was offering incentives for green cabs retrofitted to accommodate passengers in wheelchairs, many small time investors bought into this bad bill of goods. A new generation of immigrants who were looking for the same “American Dream” that their predecessors did via the yellow medallion, bought into the green cabs. All the while, there was this little know company named Uber that was lurking in the background.

The leaders of the taxi and livery industry knew at the time that Uber was operating illegally. They surely complained to the City Council, the TLC, the New York State Attorney General and even the Federal Trade Commission. All elected leaders and those in power ignored the pleas of the leaders of the taxi and livery industry to stop Uber from operating illegally. It was not a matter of Uber taking away business from the yellow taxis and the livery bases, but a matter of fairness. Two entities that provide the same service were being treated differently. The taxi and livery industry have always been heavily regulated, but Uber was not being regulated. This created an unfair playing field that is the antithesis of our American way of life that has thrived on fair play and substantial justice. This was the seed of the downfall of the industry. The City’s failure to regulate Uber created a vacuum that allowed it to expand in ways that Uber surely planned, but the City’s leaders refused to acknowledge.

The elected leaders of the City and the TLC took no action to regulate Uber. They all bought into Uber’s claim that they were not a transportation company, but a technology company. While I believe that Uber’s technology was surely excellent, I also believe in the old saying of don’t pee in my ear and tell me it is raining. By the time the City and the TLC got around to regulating Uber, it had become a behemoth with money, political power and influence. In no time at all, Uber’s fleet of vehicles eclipsed the number of yellow taxis….and then some.

I and many of my friends and colleagues in the for-hire vehicle industry pled to the City Council Transportation Committee and the Mayor to place a temporary cap on the growth of Uber until all interested parties could get a handle on what the effects of Uber were likely to be. The City’s leaders took no action and the City’s transportation regulators even took affirmative action to let Uber thrive. Before Uber’s explosive and unchecked growth, the yellow taxi industry was still doing well and the livery industry too. Then the TLC allowed a driver of a for-hire vehicle to accept dispatches form more than one base. This old requirement that a livery or black car vehicle be affiliated with only one base and its driver only be allowed to accept dispatches from that base was created for the safety of the public. All of a sudden, without any real reason or justifiable explanation, the TLC allowed drivers to accept dispatches from bases in which there was no affiliation. This was the equivalent of the ability to mint 18 carat gold bars for Uber because it allowed them to send dispatches to virtually anyone it wanted and thus expand its fleet in ways that few, except Uber, ever imagined.

Today, Uber and other companies such as Lyft, have an army of nearly 50,000 licensed vehicles that transport hundreds of thousands of people across the city every day. Uber and Lyft are rapidly transforming transportation in New York. They not only threaten the existence of the taxi industry, but they siphon passengers away from subways and buses, all while raising concerns over worsening street congestion. According to city data, the proliferation of Uber and Lyft appear to be contributing to increasingly gridlocked streets. Average travel speeds in the heart of Manhattan dropped to about 8.1 miles per hour last year, down about 12 percent from 2010. Uber and Lyft are also succeeding at the expense of others. The Metropolitan Transportation Authority has taken a hit to its budget because it receives financing from a 50-cent surcharge on taxi trips. Officials at the MTA say the shift from taxis to Uber has cost the MTA about $28 million since 2014.

So back to the taxis industry. Many of those who invested in yellow or green cabs have seen their investments wiped out. For-hire vehicle drivers are flocking to Uber with their false promise of making large sums of money all while being your own boss. Since 2013, approximately 5,000 taxi drivers have thrown in the towel. Those who own yellow medallions are either barely paying their loans back or are in foreclosure. Last month Queens-based Melrose Credit Union, one of the largest lenders of money to those who purchased taxi medallions, was seized by state after delinquent taxicab loans soared tenfold in just 18 months. The stock price of another one of the City's taxi lenders, Medallion financial Corp., has fallen so far that one share of its stock now costs less than a ride on a NYC subway. And lets not forget that the City itself has a financial interest in the sale of medallions as it takes a 5% transfer tax on each sale/transfer. This is much less money to go to the City coffers.

Moreover, the drivers that have flocked to Uber and Lyft are not looking at the big picture. Uber has made its plans to develop a self-driving vehicle very clear. In other words, the day will come very soon, when Uber will no longer need drivers. Then the for-hire vehicle drivers will have no work. The taxi industry will be on life support or dead and the out of work drivers will then cause the unemployment lines to swell.  Worst of all, the public just does not see the ills inherent in Uber and Lyft. Their explosive growth was made possible by luring riders away from taxis and the traditional modes of for-hire vehicle transportation (livery/community car services) with artificially low prices because they are being subsidized by a massive influx of cash by large pocketed investors. Uber has engaged in anti-competitive conduct since its inception. Competition has always been good for the consumer as it keeps prices low and the incentive to innovate high. This is why the law prohibits monopolies. So all while Uber and Lyft take all measures necessary to kill off the competition, they continue lure the public to their apps.

The public and the elected leaders of the City and State need to wake up and realize that at some point in the near future, the combination of significantly reduced competition with the eventual need for Uber to turn a profit, will lead Uber to drastically increase prices. When Uber has little or no competition, what options will the public have? Taxis may very well be gone, community car services will slowly be wiped out and the MTA is always in disarray, financial and otherwise. Uber will then be in the position to raise prices to whatever it wants and will be able to fleece the pockets of anyone with a smartphone. If we stay on this path, the public will have two options. One is to walk to their destination or be financially raped by Uber. Neither sounds like a very good option to me. And what will the elected leaders do then? Will they seek to regulate the prices of Uber trips? Will they create further regulations to stagnate the vitality of for-hire transportation in the City? Will they do nothing and just let the public deal with the problems? At this point in time, all I know is that the City and State have not learned the lessons from their past errors and mistakes. Someone needs to force the elected leaders of the City and State to open their eyes…or perhaps the public should just vote those with blinders on out of office.  

So at this point in time, what can the public do, short of voicing their opinion through the power of the ballots? The public can support their tried and true local car service. Don’t turn your backs on the liveries that provided transportation to the City during a past time in recent history, such as the late 80‘s and early 90s, when it was unsafe and unpopular to so, especially in the outer boroughs. Car services such as Carmel Car and Limousine Service and Dial 7 Car and Limousine Service have been in business since the late 1970's/early 1980’s and have apps that are just as good as the one created by Uber and Lyft. Carmel and Dial 7 have been there for the public in its time of need and now the public should return its loyalty to Carmel and Dial 7, and other livery bases, by refusing to utilize Uber and Lyft. Support your local car service is akin to only buying American made goods. Sometimes it may be hard to do so, but in the end, who will be the loser by continuing to use Uber which will allowing Uber to kill off the competition. The public will suffer. I speak my peace not because I have the magic 8 ball that allows me to see into the future, but because I care. I take the time to think about the future of our City, the needs of the public and the path to destruction that the transportation industry is now on. I hope that some elected leaders take a good long look at history, think about what I am saying/preaching in this article and give my opinions its due consideration and not let campaign donations and the desire to stay in office cloud their judgment. I also hope that members of the public think about what I am saying and use your good sense to realize that Uber is not the solution, but is the problem. 

How risky is your Uber ride? Much More than you think

An Uber ride is different from hopping into a taxi or a traditional car or limousine service. When you download Uber's app and get into a car summoned with the mobile reservation system, you agree to a host of terms and conditions by default. Uber claims it puts potential drivers through a background check so that they can become an impromptu taxi driver using their own car and Uber's tech platform. The incidents, injuries, assaults and accidents involving Uber drivers and the riding public are too numerous to detail. But the real issue is that the public should understand Uber's responsibility to passengers (or lack thereof).

What exactly do passengers agree to when they use Uber? That depends on whom you ask. Most people don't know what they're getting into when they get into one of these Uber cars and they surely don't know what they're getting into when they download the app. The public is essentially giving Uber a free pass -- up to and including possible death.

Uber's terms and conditions are a way for the company to absolve itself of any liability in cases of injury or accident and to avoid responsibility for a driver's actions. It is a way for Uber to attempt to cover their ass and claim they are not responsible for anything that happens to you. Uber's public statements on safety contradict its terms and conditions. It is akin to an outright deception on people. They surely do not in any way seek to warrant that their product/service is safe.

The fine print of Uber's  terms and conditions clearly says that passengers accept a risk by using the service. "You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable," Uber's terms and conditions read, "and that you use the application and the service at your own risk." Lyft essentially operates the same way as Uber.

In essence, Uber and Lyft are basically trying to show through their terms of use that they are ride-matching services, rather than transportation companies. No one is really buying that they are merely tech platforms, but people continue to use these services without knowing the true potential dangers

While there are some Uber and Lyft drivers that are safe, courteous and competent, several incidents have occurred during the past few years that have called into question the safety of the services. The most severe incident was the death of 6-year-old Sophia Liu, who was  struck and killed by an Uber driver on New Year's Eve in San Francisco. There have also been more than a dozen allegations of sexual assault and gropingkidnapping; and physical assault, according to several media stories.

Uber claims its drivers are independent contractors rather than employees, which if true, it protect Uber from liability. But the company's terms and conditions can be trumped in court if it's shown that Uber exercises a certain amount of direction and control over its drivers and they more are akin to employees. Such factors of control include the ability to hire and fire drivers, decide where their services are performed, or provide them with specialized equipment, along with other considerations -- many of which, some would argue, including myself, Uber has.

Soon enough, the time will come when the issue of whether Uber's drivers are independent contractors or employees will hit the appellate courts and if it goes bad for Uber, then their entire business model may be placed in grave danger...the same type of grave danger that Uber often places its customers.....the danger of death.

Uber and the Demise of the Taxi industry and the Dawn of the Tyranny

New York state took over a small credit union in September of this year because of the “unsafe and unsound conditions” at the institution. The real reason for this is Uber. One third of Montauk Credit Union’s portfolio of $170 million in outstanding loans were to taxicab operators, all of which have been struggling to pay their loans to their lenders.

Since the dawn of the Hass Act, a taxi medallion was likely the best investment in the world. Enter Uber and the technological revolution they brought to the for-hire vehicle industry in New York City. Taxicab operators typically take out loans for medallions, the city-issued licenses that they need to operate. Yellow taxi medallions were always a hot commodity in New York City because the city always severely limited how many licenses it issues, thus driving up the demand for them and their value. Just two years ago or so, a single license could sell for as much as $1.3 million.

When Uber entered the marketplace, they exploited loopholes in the system by skirting existing rules and regulations or by simply ignoring them. By the time the TLC got around to bringing them under their regulatory umbrella, Uber was already entrenched in the market. The loopholes exploited by Uber let the company’s fleet of drivers grow over the past five years to about 60,000 drivers in New York City. Keep in mind that there are only 13,237 licensed yellow cabs in the city. 

As Uber’s estimated value has skyrocketed to an estimated $65 billion in the past few years, the value of the city's taxi medallions has shrunk from $1.3 million to less than $700,000. The plummeting value of taxi medallions doesn't just hurt taxi owners. Much like how the housing bust in 2008 shook the home loan industry, banks across the country that specialize in medallion loans are now taking a massive hit. With the crash in prices, many loans are now underwater, many borrowers are in default and lenders are reluctant to continue to refinance as the borrowers struggle to make payments.

A group of Credit Unions have sued New York City and the Taxi and Limousine Commission for allowing Uber to operate, saying the company is destroying their businesses and threatening their livelihoods. The situation will get worse before it gets better for taxi owners and their lenders. Financial institutions with large exposures to the taxi medallion industry have had to take appropriate steps to measure and mitigate this increasing credit risk. As Uber and the other so called “ride-sharing companies” have overtaken the on demand transportation market in New York City, medallion prices will to continue to decline. The end result is still unknown. No one, except a few people, would have predicted the housing market crash in 2008 and look what long term ripple effects that caused. While the Taxi industry is not quite as large as the housing industry, the fact remains that the “Uber effect” has not only decimated the taxi industry in New York City, but is harming, and sometimes destroying, the credit unions that loaned taxi owners money to purchase the medallions in the first place.

I don’t blame Uber for this. I blame the City of New York. The allowed Uber to operate outside of the law, allowed them to proliferate over time and caused the value of the hottest commodity in town (the taxi medallion) to plummet…and that decline will only continue and the ripple effects will be harmful not to just the taxi owners and their lenders, but to the public. If things continue as they are, there will likely come a time when Uber is the only game in town….and when they are, they will do as all monopolies do, they will exert their power and influence in a manner that is detrimental to the interest of the riding public. The only difference between Uber and Standard Oil is that once the medallion industry is decimated and the car services are no longer in business, there is no going back to the “old days”. A theoretical break up of Uber, if it were to become an illegal monopoly, would not make the price of the yellow medallions rise, will not prompt people to go out and purchase medallion and will not prompt lender to loan money to those who may seek to purchase a medallion. Hence, any theoretical break of the Uber Monopoly that is set to occur in the future will not increase competition because there will be no competition.

And remember, Uber is not the Salvation Army. They are not here to save the world. They are here to gather your information and data for their own purposes. Uber is not just a ride sharing company. Look further into the future, remember George Orwell’s 1984 and consider what happens when an almighty entity controls all the data on the comings and goings of the citizens of New York City. The consolidation of power has been a danger since the dawn of time. Our country was founded upon the principle that the consolidation of power is bad and leads to tyranny. Where do you believe Uber is headed? Think about It and Draw your own conclusions. 

The City and TLC Treats Uber and Lyft Unequally From the Rest of the Industry

By now, Uber is known for a uniquely aggressive approach to establishing a market foothold: They push themselves into a market, cause a ruckus, upset people, break rules and then (seemingly as a last resort) work on bringing everybody together. In New York City, the local government and the Taxi and Limousine Commission (TLC) allowed Uber and Lyft to operate in an illegal fashion for so long that the TNCs were eventually absolved from their past indiscretions, in exchange for finally submitting to the TLC’s regulatory scheme.

At this point in time, we are used to the personality of Uber, which consists of using unfair and often illegal acts to dominate the world. While we do not condone this behavior, the TLC’s actions of continuing to accept Uber’s plea for forgiveness, rather than mandating that they ask for permission first, is arguably more reprehensible than Uber’s own conduct. Because of the disruption caused by Uber and Lyft, the TLC has now taken the approach of regulate first, then ask questions later. But the TLC still fails to recognize or admit that their well-intended regulations continue to be ignored by Uber and Lyft – and their acts of absolving Uber from continued violations is not only inherently unfair, but often does more to restrict entrepreneurs than protect consumers.

The livery industry is so upset, not because they are being beat by technology, but because we now have to compete against a company who is not required to play by the same rules. What is more unfair than the government treating two entities that provide the same service in an unequal fashion?

Uber and Lyft relish their status as disrupters and have a long record of operating in violation of local laws. They have done this in New York, across the nation and around the world. While the TLC eventually drafted new rules for Uber and Lyft to play by in a fair fashion, the TLC’s failure to enforce these rules is reprehensible. Uber and Lyft are still continuing with their dirty old tricks. After causing the breakdown of the yellow taxi and black car industries, Uber and Lyft are now after the livery industry, seeking to conquer it with tactics that completely disregard existing laws.

Uber and Lyft's latest trick involves a direct attack upon the livery industry. A year ago, the de Blasio administration passed a rule that prohibits what's called “cross-dispatching,” where black car bases (like those owned by Uber and Lyft) cannot dispatch livery cars and vice-versa. This might seem like some obscure regulation, but the rule was created to protect livery customers who typically live outside Manhattan and can’t afford Uber's diabolic surge pricing practices. (Many livery customers don’t even have a credit card, which is necessary for all Uber transactions.) The rule was also created to protect livery drivers who are not covered by either the Black Car Fund or the Livery Fund. If a livery driver accepts a dispatch from one of Uber or Lyft’s black car bases and is subsequently involved in an accident, they are covered by neither Fund. Furthermore, when Uber and Lyft illegally dispatch a driver affiliated with a community car base, they also hurt the poorer and older members of our communities who are supposed to receive a binding price quote when a livery driver picks them up. The binding price quote is the protection afforded to those members of our community who request services via a livery driver, and it is one of the primary differentiators between a livery base and a black car base.

While Uber and Lyft’s illegal and underhanded tactics are despicable, what is even worse is that the TLC has ignored the pleas of the livery industry to compel Uber and Lyft to comply with the law. For example, several livery bases and myself, on behalf of the Livery Roundtable, have already alerted the TLC about Uber and Lyft’s illegal activities, and even provided them with proof, but the TLC has, to date, done nothing to stop them. If the TLC refuses to hold Uber and Lyft accountable for their illegal actions, then how can the TLC claim to be fair and purport to apply the law equally to all those that come under their regulatory authority. The TLC is too busy figuring out how to regulate more, rather than enforce the regulations that already exist. What is the good of more regulations when the TLC does not enforce the ones they have in the first place?

It is one thing for a company to enter the marketplace with a superior product and/or provide superior service and obtain market share on those merits. It is another story when entities, such as Uber and Lyft, are able to enter the market, totally disrupt it, break the law, and be absolved of all wrong doing by simply asking for forgiveness. If this was all in the past, I would move on to other issues, but I am talking about the present. The TLC still has not taken any action in response to the uncontroverted proof that I submitted to them of Uber’s illegal actions.

I suppose to the TLC is it is acceptable for them to have two standards – one for Uber and Lyft and one for the rest of the industry. The livery industry is not Uber or Lyft, and will never be. We pride ourselves on being made up of over 400, mostly mom-and-pop car service businesses. The problem is that the livery industry is worried that because of Bill de Blasio’s bruising fight with Uber last summer, the administration will continue to take an even more hands-off approach to Uber and Lyft. Uber and Lyft should not get a free ride at the expense of car service companies and their customers, just because they have the money to launch a strong marketing campaign against the de Blasio administration. We hope the administration takes action… and fast. While the TLC sits idly by, our businesses and customers are suffering.

By: Steven J. Shanker, Esq.