For more than a decade, the California economy has been defined by the tech start-up economy. While we celebrate its innovations and entrepreneurial spirit, we must also evaluate its consequences to ensure a level playing field for all companies, especially long-established ones that pay good wages, have strong job training programs and are strong community partners.
App-based companies – think Uber, Lyft, AirBnb – are now exploding at a rate that far outpaces state or federal law. The California Legislature is at the forefront of developing policies that balance new technologies with the current mandates on traditional businesses.
A recent example is Turo, an app that connects those looking to rent a car with those who are willing to rent out their personal vehicle. Since it doesn’t own any vehicles, Turo claims it is not a rental car service, though nothing in California law on car rental companies refers to ownership. Turo is exploiting this alleged loophole to sidestep car rental regulations and gain an unfair market advantage.
Assemblywoman Laura Friedman introduced common-sense legislation – Assembly Bill 2246, which is set to be heard Tuesday by the Assembly Judiciary Committee. It would require peer-to-peer rental companies such as Turo to comply with state laws that govern other rental car companies.
For instance, state law prevents companies from renting out a car with an active safety recall. By claiming not to be a car rental company, Turo is not responsible for determining whether cars available on its site are safe. Nor does Turo believe it is bound by the same laws that prevent rental companies from engaging in unwanted GPS tracking and other important privacy measures.
Since Turo is sidestepping regulations that impact all other airport rental car companies, the city of San Francisco has filed a lawsuit to make it pay airport fees that help pay for critical infrastructure and to comply with prohibitions against curbside rental car drop offs that worsen congestion. Turo’s response has been to push state legislation to exempt itself from these important privacy and safety protections.
We are strong advocates for new technology and competition to grow the well-paying jobs we need in California. But a level playing field is critically important to stimulate investment across all sectors of our economy. AB 2246 is the latest example to ensure the unintended consequences of our rapidly evolving tech economy do not compromise safety or let companies gain an unfair advantage in the name of innovation.
Rob Lapsley is president of the nonpartisan California Business Roundtable. He can be contacted at email@example.com.