Sen. Jennifer McClellan: Virginia legislature works to adapt to the gig economy

Jennifer McClellan

The General Assembly adjourned sine die last week after passing more than 800 bills that now await action from the governor. Several of the bills passed address the 21st century generational and technological changes that have led to one of the most dramatic transformations in the American economy in decades — the “on-demand”, “sharing,” or “gig” economy.

Rapid changes in technology have given rise to new business models, such as Uber, Lyft, and Airbnb that do not fit Virginia’s regulatory structure and disrupt “legacy” industries. As a result, the General Assembly has had to update laws governing everything from zoning, consumer protection, insurance, and taxes to allow these new models to grow while providing consumer protections and avoiding the creation of an unlevel playing field for legacy industries competing with these new businesses.

In 2015, Virginia became the first state to adopt a comprehensive legal framework for transportation network companies (“TNCs”) like Uber and Lyft, which required TNCs to be licensed by DMV, to screen drivers to ensure that all are at least 21-years-old and properly licensed to drive, and to conduct background checks on all drivers, including a national criminal background check, a driving history report, and status on the state and national sex offender registries. We also put several consumer protections in place, most notably requiring that TNC drivers be covered by a specific liability insurance policy.

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This year, we expanded that framework to reflect recent evolutions in the TNC market. First, to make it easier for new TNC companies to operate in Virginia, SB 1101 (Newman) and HB 2032 (Adams) allow TNCs two fee options when applying for an original or renewal of a certificate. Now, a TNC may either pay the existing certificate fees of $100,000 upon application and $60,000 for renewal or pay a $20 surcharge per record when purchasing a driver transcript in addition to the current transcript fee.

Second, HB 2019 (Villanueva) and SB 1366 (Newman) streamline the TNC law by removing the requirement that a TNC driver register his or her personal vehicle for use as a TNC partner vehicle with DMV, allowing State Police to recognize another state’s annual motor vehicle safety inspection in lieu of a Virginia inspection, and clarifying that a TNC driver can keep proof of inspection in or on the vehicle.

Third, we adopted a legal framework to allow a company to broker TNC rides. A Richmond-based company, UZURV, saw the demand for a TNC reservation system in which someone could pre-arrange a ride or reserve a specific driver. However, UZURV did not fit within the current laws for TNCs or other types of transportation brokers. As a result, I introduced SB 1494, which allows brokers to arrange rides with TNC drivers, requires such brokers to be licensed by DMV, and includes insurance requirements covering TNC drivers operating at the request of a broker.

Fourth, as TNC companies have expanded their business models to deliver property in addition to providing rides, the General Assembly saw the need to overhaul its laws governing property carriers and bulk property carriers by combining their authorities, eliminating current license requirements for property brokers and the requirement for DMV to issue specially designated license plates for property-carrying vehicles operated for hire, and standardizing insurance limits for property carriers and bulk property carriers.

Fifth, SB 1207 (DeSteph) and HB 2016 (Villanueva) allow the use of Electric Personal Delivery Devices (EPDD) in Virginia, making Virginia the first state to approve of EPDDs operating on sidewalks, shared-use paths, and crosswalks. Starship Technologies, which requested the legislation, is building a fleet of EPDDs robots designed to deliver goods in high-density urban areas in 15 to 30 minutes in an effort to reduce congestion and pollution in cities and neighborhoods, increase convenience, and reduce costs. These “robot coolers” travel on walkways to deliver parcels, groceries, and food, have a sophisticated obstacle detection system, and can travel up to a radius of two miles.

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Finally, the General Assembly continues to struggle with the regulation of short-term rentals such as Airbnb. Last year, legislation sponsored by Del. Chris Peace and Sen. Jill Vogel to establish a statewide policy regarding Airbnb rentals was referred to the Housing Commission for study. The Commission agreed a statewide framework is appropriate, but did not put forward specific legislation.

However, the General Assembly passed SB 1578 (Norment) allowing localities to adopt an ordinance requiring the individuals offering property for short-term rental to register with the locality. The bill also treats a short-term rental as a bed-and-breakfast establishment for purposes of ABC licensing. I suspect we will revisit short-term rentals again in the future as we seek to reach consensus on a statewide policy to replace the patchwork of local regulations and ordinances that vary widely across the state.

The Virginia economy is limited only by the imagination of entrepreneurs who can develop technology or a business model to meet new demands in an ever-changing market. With the rapid changes in technology, government will continue to have to adapt quickly so as not to stifle these new industries. I suspect we will be dealing with the sharing economy market evolutions for some time.