Uber, the popular ride-sharing app used in 57 countries across the globe, took a giant blow in its home state on Wednesday, July 15, when an administrative judge recommended that the company be fined $7.3 million and be suspended from operating in California.
In her decision, chief administrative law judge Karen V. Clopton of the California Public Utilities Commission (CPUC) contended that Uber has not complied with state laws designed to ensure that drivers are giving out rides fairly to all passengers, regardless of where they live or who they are. Clopton said that Uber’s months-long, delayed refusal to provide such data is in violation of the 2013 law that legalizes ride-sharing firms.
The law allows ride-sharing services (such as Uber, Lyft, and Sidecar) to operate without having to follow the exact, stricter set of rules that cab companies follow. As part of the rule, companies are required to prepare an annual report with comprehensive data about rides provided through the app.
“They had a year to comply with these regulations, and didn’t do it,” CPUC spokeswoman Constance Gordon said, referring to Uber’s failure to report requirements tied to its state approval as a transportation network company.
Judge Clopton also said that Uber failed to submit complete information on drivers who have been suspended or committed a violation. The company did not provide “the cause of the incident reported,” or the amount paid out by any insurance company other than Uber’s.
Uber said it would appeal, which could take several months, depending on the process of suspension and possible fining. They have 30 days to do so.
Uber competes with the taxi industry by contracting with drivers and connecting them with passengers through a simple smartphone app. Passengers can request different models of cars through Uber’s luxury line UberLUX, as well as spacious SUVs and low-cost “uberX” models.
Clopton wrote that her proposed ban would remain in effect until the company “complies fully with the outstanding requirements.”
The reporting requirements include the number of requests for rides from people with service animals or wheelchairs; how many such rides were completed; and other basic ride-logging information such as the transaction date, time, Zip Code and fare paid. For Uber, which has raised $5.9 billion in venture capital investment, a $7.3-million fine would amount to less than 1 percent of that. A suspension, however, is another matter.
Uber called the decision “deeply disappointing,” and plans to appeal soon.
“We will appeal the decision as Uber has already provided substantial amounts of data to the California Public Utilities Commission, information we have provided elsewhere with no complaints,” Uber spokeswoman Eva Behrend said. “Going further risks compromising the privacy of individual riders as well as driver-partners.”
The administrative judge’s decision was applauded by Marilyn Golden, a senior policy analyst at the Disability Rights Education & Defense Fund in Berkeley.
“This industry has done everything it can to avoid, dismiss and coerce themselves out of regulation, and this decision is welcome from that standpoint,” Golden said. “They’ve been scofflaws. They take every advantage and avoid every requirement.”
Juan Matute, associate director of the UCLA Lewis Center and the Institute of Transportation Studies, said that he expects Uber to pay the fine and comply quickly with the ruling.
“The $7.3-million and the data they are asking to provide is not that significant in the grand scheme of things,” Matute said. “Especially in California, I think Uber wants to be seen as a team player because of the recent labor board decision and how that could affect their business. This would seem like a small consolation to improve their chance of success with other regulatory issues that could have a bigger impact on them.”
The company is already banned in various countries for different shady business practices; from poor driver vetting to worker exploitation. Last month, the California Labor Commissioner’s office ruled that Uber drivers must be classified as actual employees—and entitled to all the protections of benefits of that status—rather than “contractors,” as Uber has always claimed in order to keep its costs low.
Uber, meanwhile, says it has provided the necessary information to the state, but it also believes that the requirements are overly broad.
“These CPUC requests are also beyond the authority of the Commission and will not improve public safety. It is important to note there will be no suspension while the appeal is heard,” continued Behrend. (With reports from Los Angeles Times, LA Weekly, Curbed LA)
