University of Southern California

From Jitneys to App-Based Ridesharing: California's "Third Way" Approach to Ride-For-Hire Regulation

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Note by Ravi Mahesh
From Volume 88, Number 4 (May, 2015)

88 S. Cal. L. Rev. 965

A new breed of “app-based” ride-for-hire providers has caused a stir in California, helped rewrite the state’s rules governing ridesharing, and stoked tensions among taxicab drivers, state and local regulators, and the technology companies behind the new apps. UberX, Lyft, and Sidecar are among the most well-known of the new app-based rideshare services, which allow customers to hail a ride using smartphone applications by connecting them with drivers who also use the apps. Critically, the drivers need not be professionals; rather, they merely need to have downloaded a ridesharing app and been cleared by the app provider to drive. For a time, the app-based rideshare companies pointed to these novel aspects of their services to flout regulation entirely. New laws and rules in California, however, provide for the regulation of the nascent industry under a statewide scheme mandating insurance coverage, driver background checks, and other safety-based requirements. In substance, the new rules signal the state’s tacit approval of the development of app-based ridesharing services. Users of these app-based services, which are currently available only in major metropolitan areas like Los Angeles, have been impressed by the apps’ lower prices and perceived higher quality of service.

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