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SF sues California over law that shelters Lyft, Uber drivers

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“Uber and Lyft need to play by the same rules as every other business in San Francisco,” says city attorney

A car painted pink and covered with the Lyft logo driving in New York City. Roman Tiraspolsky

San Francisco City Attorney Dennis Herrera announced Thursday that the city will sue the state of California over a law that Herrera’s office alleges gives Lyft and Uber drivers an unfair tax shelter while undermining the authority of cities to govern their own streets for the benefit of ride-hailing companies.

Senate Bill 182, which passed the state senate on a 32-4 vote in September, prevents cities like San Francisco from forcing out of town Transit Network Company [TNC] drivers from registering their SF driving gigs as businesses by limiting the number of registrations drivers must have:

This bill would prohibit any local jurisdiction, as defined, that requires a driver, as defined, to obtain a business license, as defined, to operate as a driver for a transportation network company, from requiring that driver to obtain more than a single business license, as specified, regardless of the number of local jurisdictions in which the driver operates.

The bill would require the driver to obtain a business license in the local jurisdiction in which the driver is domiciled, except as specified.

As Herrera points out in his suit, Northeastern University estimated in a private 2017 study that only 29 percent of San Francisco’s 45,000 TNC drivers are from San Francisco (although we should note that no authoritative count of drivers or survey of their residences exists), meaning that SB 182 in effect prevents the city from registering the overwhelming majority of Ubers and Lyfts on SF roads.

Herrera argues that this unlawfully hinders the city’s right to regulate its business environment and city streets. According to the suit in SF Superior Court:

Prior to January 1, 2018, around 21,000 TNC drivers obtained a Business Registration Certificate from San Francisco. [...] Registrations generated around $1.9 million annually for San Francisco. [...] TNC drivers were treated the same as all of the 130,000 businesses that have registered in San Francisco. [...] SB 182 is simply a legislative declaration of a holiday from local taxes for a favored group.

Uber headquarters in San Francisco.
Uber headquarters in San Francisco.
Photo by Bjorn Bakstad

“Uber and Lyft need to play by the same rules as every other business in San Francisco,” Herrera said in a statement. “Nearly everyone, from a professional dog walker to Google, has to register their business. Uber and Lyft’s attempt to carve out a special exemption for their drivers is not fair.”

Nobody at Lyft was immediately available for comment on the suit. Uber declined to comment, but did furnish a statement from SB 182 author Senator Steven Bradford.

Says Bradford:

“SB 182 is a straightforward measure that I authored to protect all Californians, who work as TNC drivers, from dubious taxes and fees. Many of these drivers are part-time and working multiple jobs to survive. This is a frivolous lawsuit.”

The litigation is not an unexpected move, as the city tried to argue against the law while it was in the legislature.

“We are overwhelmed with these vehicles,” city lobbyist Solis Shaw told the LA Times in 2017, arguing that places like SF need business licenses “to deal with the impacts on our city.”

Lobbyists for Uber and Lyft argued that licenses unduly burden drivers and that having to registers as a business and have their addresses become public information violated their privacy.