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September 24, 2013

California Sets First Statewide Guidelines for Ride-Sharing Services

By Ashok Bindra, TMCnet Contributor

Ride-sharing services have been around for decades in all major cities across the United States, but there have been no safety guidelines or standards for sharing car rides. While many individual cities have been considering laws around ride sharing, they have not been implemented at a statewide or national level.



Now that is changing, as the California regulatory agency has approved the first statewide guidelines in the U.S. for ride-sharing services, and thus setting up safety guidelines and regulations for companies offering such services.

As a result, ride-sharing companies like Lyft, Sidecar, and UberX will have around a year to bring their drivers up to the standards set by the California Public Utilities Commission, reported CNET. It includes things like background checks on drivers, driver training, and minimum insurance coverage.

For ride-sharing service providers, this as a win-win situation as it allows them to expand their services to other cities in the state without hurdles. Prof. Arun Sundararajan of New York University's Stern School of Business told CNET that these rules do bring some legality to the business.

However, for the sake of safety of their drivers and customers, many of the companies in this business have been adopting some self-regulated guidelines. According to the professor, “a lot of what the government is dictating here should be something the market takes care of on its own.”  

Media reports indicate that the Taxi industry is not happy with the new rulings because it is going to undercut taxi fares. Plus, the taxi drivers believe that ride-sharing services were not going to be safe. And it was going to be improperly insured. However, the State Commission does not agree with the taxi industry and believes that the new guidelines ensure safety for both drivers and customers.

The report shows that the new ride-sharing guidelines include criminal-background check for drivers, driver training, a minimum $1 million of insurance coverage, and a no-tolerance drug and alcohol policy. In addition, it also requires drivers to display signage that identifies them as a ride-share service.

According to Sidecar CEO and founder Sunil Paul, California’s ride-sharing regulations send a signal to the rest of the country, as well as the world, that “there is a new way to think about transportation,” reported CNET.




Edited by Alisen Downey
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