Report shows that rideshare companies convinced the majority of states to enact laws in the businesses’ favor.
Which two companies together have more lobbyists than Amazon, Microsoft, and Walmart combined? The answer: Uber and Lyft.
In only four years, the rideshare giants used their extraordinary lobbying efforts to convince 41 state legislatures and many local governments to pass legislation protecting for-hire transportation companies from regulation.
A recent report from the National Employment Law Project and the Partnership for Working Families details the companies’ strategy for preventing regulation concerning worker and consumer safety. The basic strategy is one the report calls “barge in, buy, bully, and bamboozle.”
Uber and Lyft have successfully fought for and obtained a variety of laws that protect their interests. Some create a presumption of independent contractor status for drivers, which exempts rideshare companies from having to provide unemployment insurance, workers compensation, and minimum wage laws. Others prohibit local governments from regulating the companies, whether through background check and fingerprint requirements, or through caps on the number of drivers in a city, or the hours that drivers may work per day. In multiple states, company lobbyists effectively drafted these laws themselves, according to the report.
How have Uber and Lyft achieved their lobbying successes? The report details numerous examples where the rideshare companies have taken steps to “manufacture a crisis at the local level and appeal to state legislatures to fix that crisis by overruling local law.”
Typically, the companies “barge in.” This means they flood the city with the new service quickly, often by initially offering very low prices and credits for referrals. Thus, city residents quickly grow to depend on the service and become regular customers. In both Philadelphia and Miami-Dade County, this has meant operating in violation of existing regulations. Rather than letting regulation stop them, Uber and Lyft offered to pay all the fines for their drivers, treating violating regulations as the cost of doing business.
Next, the companies “buy influence” by flooding local and state decisionmakers with lobbyists. In Portland, for instance, Uber and Lyft had 16 lobbyists work with city officials, which apparently represented 30 percent of all lobbying activity in the city in 2015, according to the report. In New York State, Uber reportedly spent the most of any lobbying group during 2017.
This kind of money and power led to results. In multiple states—including Oregon, Ohio, and Washington—Uber showed up with the legislation it wanted, and the legislature enacted it, the report states.
Uber and Lyft also often “bully” governments by threatening to leave cities if they do not get their preferred regulatory or legislative outcomes, according to the report. In Texas, Uber and Lyft apparently employed this tactic in a number of major cities after regulations were imposed. The wide base of support the companies gathered during the “barge in” phase made this strategy effective.
Finally, the report charges that Uber also “bamboozles” its customers. In several cities, Uber apparently used its app to communicate with customers about impending regulatory changes. The report’s authors argue that Uber communicates in ways that misleads customers. The company reportedly offers easy ways to contact city officials in order to “save” Uber because the “future of ridesharing is on the line” when regulations are about to be imposed. The company also uses “robo-calls, direct emails, tweets, multiple forms of advertising (trucks, television, utility poles), and even door-hangers” to get its message out.
All of these tactics cause overwhelmed local and state officials to give in to the demands of rideshare companies, whether or not it best serves their citizens, according to the authors of the recent report. While most of these tactics are fully legal, the report authors argue that the rideshare companies’ lobbying has led to the erosion of “democratic governance” and has limited “the ability of local government to meet the unique transportation needs of residents.”
The report includes suggestions for local and state lawmakers going forward. States should reverse local preemption laws and allow for municipalities to regulate all transportation companies, not just taxi services. Alternatively, states could create a regulatory floor that local governments can build on and tailor to their needs.
The report’s authors express concern about any local regulation that defines drivers’ employment status as independent contractors. By not granting independent contractor status, local governments can require rideshare companies to comply with other local labor and employment laws, like minimum wage and overtime.
With more than a million drivers in the United States, consumers increasingly use rideshare companies as a primary means of transportation. The report cautions that hasty regulations written by the companies themselves and passed by bullied legislators may have significant consequences for both workers and passengers for years to come.