With the state Senate’s passage of S.B. 14, Alaska is one step closer to a legal framework for transportation network companies such as Uber and Lyft. The Senate on March 23 voted 14-5 to pass the “Let’s Ride Alaska Act,” which would make Alaska the 45th state to enact comprehensive ridesharing legislation.

Uber left “The Last Frontier” after about six months in 2014, due to a spat between the company and the state Department of Labor and Workforce Development over worker classification. The state was concerned with drivers classified as contractors instead of employees, meaning they would lack company-purchased workers’ compensation insurance.

This bill codifies the classification of drivers as independent contractors. Given the complete autonomy TNC drivers have regarding their work schedule, it is hard to justify mandating additional employee benefits that likely would increase costs to consumers and prevent TNCs from taking on additional drivers.

The bill also preempts localities from imposing further regulations on TNCs, joining a growing number of states that are choosing to preempt county and municipal restrictions. This drew the ire of the capital city of Juneau, which requested the preemption clause be removed because of its desire to apply sales tax ordinances and to “require transportation network drivers to register as a business with the municipality, in the same manner as other businesses.”

TNCs could be a big revenue stream for cities and another backdoor tax on consumers. But creating a patchwork of local regulations has proven to be a bad idea. For instance, overly restrictive regimes in Houston, San Antonio and Austin have undermined transportation options in Texas. While decentralizing governmental responsibility is normally sensible, city governments are the creation of states (unlike states’ relationship to the federal government), and a jumble of municipal ordinances inevitably creates unnecessary compliance costs in an arena that’s inherently inter-jurisdictional.

Alaska’s Senate bill also requires background checks for TNC drivers. In addition to the vetting done by passenger through the TNC apps’ rating systems, the TNCs have a strong incentive to protect their customers and already screen drivers who might be likely to commit crimes while on the job. Juneau’s city government wants the freedom to add to the background-check process, including the ability to mandate fingerprinting checks with the FBI’s NGI database. Juneau justifies its request on grounds that it is “a requirement currently enforced for taxi drivers doing business in Juneau.”

But we shouldn’t impose new regulations just to “level the playing field.” Indeed, mandating fingerprint background checks through the FBI raises some serious concerns. For instance, they pose a disproportionately unfair obstacle to labor participation by minority communities. The FBI database tracks arrests, not convictions. It was built to capture lots of data, but can be prone to false positives. Nearly half the FBI’s records fail to include information on the final disposition of a case, such as whether someone was acquitted or had charges dropped.

This bill may have an uphill battle, given the interest groups it may anger, but the House Labor Committee chairman, who killed a similar bill last year, already intimated he will let S.B. 14 to go to the floor for a vote. This would be another step in the right direction for all Alaskans.

Image by Rocky Grimes

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