New rules of the road for Uber, Lyft
Public Act 345 sets statewide standards regulating taxicab, limousine and ride-sharing services, pre-empting local ordinances.
A law aimed at standardizing regulations for taxi companies and ride-sharing services is in effect in Michigan.
The Limousine, Taxicab and Transportation Network Company Act, or Public Act 345, was enacted earlier this year, usurping the ability of local governments to create ordinances or fees governing all three types of transportation companies and putting that power in the state’s hands.
Mike Huff, an attorney at Grand Rapids-based Mika Meyers who represents municipalities, said under the act, Uber and Lyft will pay the same fees and follow the same rules as taxicab and limousine companies, instead of the “patchwork of regulations” local governments previously imposed.
Other states have adopted similar legislation that Uber and Lyft already follow, he said.
“Prior to the (Michigan) act, each municipality had the ability to regulate the industry at the local level,” Huff said. “Taxicabs felt they were being left behind because there were more regulations and taxes for them, whereas Uber and Lyft had very (few) regulations overseeing them.
“Taxi companies felt it added standardizations across the state to help them be competitive by reducing municipal regulations.”
Public Act 345 standard requirements for all transportation service providers include:
- Annual criminal background checks
- Prohibition of drivers with certain convictions, such as fraud, driving under the influence of drugs or alcohol or sexual offenses
- Zero tolerance for operating a vehicle under the influence of drugs or alcohol
- Specific, standardized insurance requirements
- Full disclosure of fees, including the formula used to calculate ride rates
- Annual vehicle inspections by a licensed mechanic for every car that is 5 years old or older
Huff said local governments still have enforcement power over some things under the act, including issuing fines to drivers for civil infractions such as failure to display a state-approved reflective emblem that bears the name of the carrier or company and is large enough to be seen 50 feet away.
Local governments also can issue citations if drivers fail to carry proof of insurance; discriminate against passengers, including those with service animals or disabilities; or transport ride-sharing customers who did not place their order through the service.
Airports also retain their right to govern limousine, taxicab and ride-sharing services on their property, provided that such ordinances are consistent with industry standards, do not unreasonably impede service and do not duplicate or contradict the requirements of Public Act 345.
Under the act, ride-sharing companies will have to pay registration fees they didn’t have to pay before. Taxi and limousine companies will pay registration fees to the Michigan Department of Licensing and Regulatory Affairs (LARA) they formerly paid to the municipality.
Huff said through Public Act 345, the state solidified consumer protections via the background checks, vehicle safety measures and zero-tolerance substance use policy; leveled the playing field for transportation service providers; and generated additional revenue from the ride-sharing companies.
The towns, villages and cities are on the flip side of that, he said.
“From a municipal standpoint, it’s one more space where the city is not able to generate revenue,” Huff said.
He said many local governments had employees dedicated to overseeing the previous regulatory system.
“If you’re a smaller municipality, and you have a regulatory system for this, you have a staff person or people assigned to monitor and maintain the system, and their salary is paid for by the system,” Huff said. “Now, you have to reassign them and figure out how to replace that revenue.
“You don’t necessarily have the resources to replace the revenue being lost.”