Addressing the lack of consistent rules governing app-based ridesharing companies like Uber and Lyft, the Tennessee legislature has passed a bill which establishes a uniform law for the companies’ Tennessee operations. Affirming innovation and customer choice, HB 0992/SB 0907 exempts a Transportation Network Company (“TNC”) from municipal and other regulations applicable to traditional transportation companies such as taxi, limousine and shuttle services. A TNC is a company that uses a digital network to connect riders with the TNC’s drivers.

If signed by Governor Haslam, the new bill will likely end Tennessee litigation alleging Uber and Lyft have gained an unfair competitive advantage by not complying with local for-hire transportation rules, as we reported in the post,TAXI! Uber and Lyft Sued in Memphis. Opponents have expressed concern that if implemented, the new bill will put traditional for-hire companies out of business.

Under the new bill, however, TNCs are not free to operate without restriction. Rather, the bill accommodates a technologically advanced, mobile environment while ensuring passenger financial and personal security. Among other things, the bill requires TNCs to:

  1. Provide riders with rates charged and the option to receive an estimated fare before entering the vehicle;
  2. Use a software application or web site to display the driver’s picture and license plate number;
  3. Transmit an electronic receipt to the rider within a reasonable time that includes the origin and destination of the trip, the total time and distance of the trip, and an itemization of the total fare paid;
  4. Implement a zero tolerance drug and alcohol policy for drivers logged into the TNC’s digital network;
  5. Require a driver to submit a driver application that includes the driver’s address, age, driver license number, driving history, proof of motor vehicle registration, and automobile liability coverage.
  6. Conduct a local and national criminal background check on any potential driver that includes a multi-state criminal records locator or other similar commercial nationwide database with validation;
  7. Conduct a national sex offender registry search for any potential driver;
  8. Obtain motor vehicle records for any potential driver; and
  9. Establish a complaint procedure for customers to report a driver suspected of driving under the influence of drugs or alcohol.

TNCs are specifically prohibited from utilizing a driver who:

  1. Has been convicted of more than three moving violations in the prior three-year period, or one major violation in the past three-year period, including attempting to evade police, reckless driving, or driving on a suspended or revoked license;
  2. Has been convicted, within the past seven years, of driving under the influence of drugs or alcohol, fraud, any sexual offense, use of a motor vehicle to commit a felony, a crime involving property damage, theft, any crime involving acts of violence, or acts of terror;
  3. Is listed in the national sex offender registry;
  4. Does not have a valid driver license;
  5. Does not have proof of registration for any motor vehicle used to provide TNC services;
  6. Does not possess proof of personal automobile liability insurance that satisfies the insurance requirements under the bill; or
  7. Is not at least 19 years of age.

The bill also requires TNC drivers who are logged into the TNC’s network, but not driving, to maintain automobile liability insurance that meets at least the minimum requirements under Tennessee’s Financial Responsibility Law. The TNC must maintain the same liability coverage in the event the driver’s insurance excludes or does not provide the minimum coverage. On January 1, 2016, the required minimum coverage will increase to $50,000 for death and bodily injury per person, $100,000 for death and bodily injury per incident, and $25,000 for property damage.

Drivers providing TNC services must also maintain primary automobile liability insurance that covers TNC services and provides at least $1 million for death, personal bodily injury, and property damage. The TNC must also maintain coverage in the event the driver’s $1 million coverage lapses or fails to cover claims as required by the bill. A driver’s insurance must also comply with Tennessee’s uninsured motorist coverage laws.

The Tennessee bill is part of a national push for state regulations friendly to app-based rideshare services in an industry changing as fast as the technology that supports it. The bill was sent to Governor Haslam on May 8, 2015.