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Uber and Other Ride-Sharing Companies Now Regulated in North Carolina

The North Carolina General Assembly recently passed a bill that provides a number of regulations for Uber and similar ride-sharing companies, such as Lyft and Sidecar. Governor Pat McCrory signed the bill, “An Act to Regulate Transportation Network Companies,” into law on September 4, 2015.

The regulations include new requirements that Uber and other “transportation network companies” perform county, federal, and multi-state background checks on potential drivers, and renew those checks every five years. Based on these background checks, a number of items will disqualify a driver from employment with Uber, including being under the age of 19, having more than three moving violations in the past three years, and being convicted within the past seven years of DUI, fraud, sexual offenses, or use of a vehicle to commit a felony or other crime. The law also requires that Uber provide liability insurance coverage on the cars owned by its drivers. Specifically, Uber must purchase insurance for two scenarios: (1) while a driver is logged on to the mobile app, but is not providing service, and (2) while a driver is transporting a passenger.

For its part, Uber already performs background checks on its drivers and also provides $1.5 million of insurance coverage while a driver is transporting a passenger. According to Uber, the “legislation codifies these requirements affirming the safety standards we’ve had in place since the beginning.”

While the law provides that the insurance requirements described above can be satisfied by either Uber’s insurance or the driver’s personal insurance, the law also recognizes that a driver’s personal insurer can exclude coverage for any loss that occurs while the driver is operating as an Uber driver. As I mentioned in a previous post, it is likely that a court would find that current North Carolina automobile policies already exclude such losses based on the “public or livery conveyance” provision. Furthermore, an Uber driver must now notify his or her personal insurance company, as well as any lienholder on the vehicle, that the driver intends to use the vehicle as an Uber vehicle. It is unclear what effect this notice requirement will have on a driver’s private insurance or vehicle loan.

Additional regulation set forth in the new law includes a new requirement that Uber purchase a permit from the State in order to operate in North Carolina. The cost for the permit includes an initial $5,000 application fee and an annual $5,000 renewal fee. Uber must also disclose the calculation method it uses for its fares before a passenger makes a ride request. It is unclear whether the current “Fare Estimate” satisfies this requirement. The full text of the new law can be found here, on the NC General Assembly’s website.

According to Uber’s website, Uber currently operates in 15 markets in North Carolina, and has created 8,000 job opportunities and paid over $20 million to North Carolina residents. While the taxi industry’s opposition to transportation network companies remains, it is clear with the passage of this legislation that Uber and others have established themselves as players in the North Carolina transportation arena.

About the author: David advises and represents clients in state and federal court in a number of areas including trucking and transportation, product liability, and business litigation. In addition, David advises healthcare providers concerning regulatory compliance matters and in claims of medical malpractice. For questions about this article, please contact David.