Chairman and
members of the committee:

Thank you for
considering our testimony. The R Street Institute is a nonprofit, nonpartisan
public policy research organization. Our mission is to engage in policy
research and outreach to promote free markets and limited, effective government
in many areas, including the regulation of transportation network companies
(TNCs), which is why we are submitting this testimony on S.B. 989.

S.B. 989 would
mandate that TNC drivers receive at least 75 percent of the fare collected from
each ride and cap the portion of fares that TNCs can receive at 25 percent of
the total. Regardless of the motivations behind this bill, it is clear that its
enactment would have deleterious effects on riders, drivers and TNCs alike.
Setting stringent requirements and caps on the distribution of rider fares
undermines the dynamic pricing model that allows TNCs to respond to rider
demand in a real-time, transparent manner. Current TNC pricing models account
for factors like upfront pricing and personal liability insurance coverage for
passengers, both of which could be impacted by imposition of the strict cap
contemplated under S.B. 989. The result could be higher costs for drivers and
riders, leading to less access to ridesharing services in Connecticut.

In addition to the
disruption this legislation could cause, it also raises concerning public
policy and governance issues. Although many industries use independent contracting
models, S.B. 989 singles out TNCs without any articulated reason for doing so.
Longtime contracting sectors such as real estate agents, insurance agents,
construction workers, janitors and freelance journalists do not face these
types regulations on fares and earnings, nor have there been any proposals to
impose them. Likewise, no other state has proposed or enacted legislation
similar to S.B. 989, further underscoring the incongruousness of the

For years, the R
Street Institute has taken a leading role in the conversation surrounding worker
classification issues and the future of work. Our team has partnered with
groups across the ideological spectrum, including representatives of organized
labor, to consider options like portable benefits packages and a new type of
flexible worker status. While we firmly believe that it is vital for such
discussions to continue in the face of an evolving and innovative labor market,
S.B. 989 fails to address these issues in an effective or appropriate manner.

Ultimately, a
robust ridesharing market is beneficial for Connecticut residents and riders.
Commuters in the state often depend on TNCs to provide a reliable alternative
to the tri-state region’s struggling public transportation system. Residents also
use ridesharing to secure rides to and from airports and train stations, to
ensure elderly family members are able to attend medical appointments and as a
safe means to get home after a night at the bar. Ultimately, S.B. 989 would
hinder a worthwhile service on which many state residents rely.

Thank you for your time and
consideration, and please do not hesitate to contact us if we can be of further

Respectfully submitted,

Nicolas John, Northeast Region Director

C. Jarrett Dieterle, Director of Commercial Freedom

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