How to Comply with Many New Laws Immediately Affecting Almost All NYC TLC Licensed Transportation Businesses!
2018 was a landmark year for taxicab for-hire ground transportation regulation in New York City, with a still-growing mountain of new regulations, fees, fines and compliance requirements that transportation businesses must address – some immediately and others throughout 2019. Some of these actions were taken in response to the unfortunate driver suicides that shocked the city and opened legislators’ eyes to the extent of the problems that had accrued over years of regulatory inertia. This article will recap the transformative year of 2018 and highlight what is (and may be) coming in the New Year on the NYC regulatory horizon.
The many new laws and regulations include the New York City Council freezing the number of For-Hire Vehicles (FHVs) on the road, ordering minimum driver pay from the largest FHV companies (and possibly EVERYONE in the for-hire industry soon), and requiring the largest so-called “High-Volume For-Hire Service” app companies to obtain new licenses to operate. In June 2018, after months of litigation, the City reached a settlement with Uber, Lyft and Via concerning the rules passed by the New York City Taxi and Limousine Commission (TLC) mandating FHV bases dispatch trips to wheelchair accessible vehicles (WAVs), with imminent compliance deadline looming for all for-hire bases. Also, back in March 2018 the State imposed a congestion surcharge on FHV and taxi trips through Manhattan, south of 96th Street, starting January 1, 2019. On top of all these changes, more pending TLC regulations and NYC Council bills affecting the taxicab and for-hire industries have continued to be introduced and proposed, as well as the real possibility that in 2019 the Port Authority of New York and New Jersey will revive its access fees for all NYC airports, charging the industry additional fees to pick-up or drop-off passengers.
This article should be read by everyone in the industry, as the impacts are widespread. If you have not already thought about these changes and how to comply, it may not be too late! There is a lot to digest, but this article summarizes the basic changes, how to comply and what each change means for each industry segment. I cannot emphasize how important it is to stay on top of these changes and develop an implementation plan. There are many compliance requirements that go well beyond the language of the law, and this article is not a substitute for sound legal advice and regulatory business strategy. If you need our unique insight on which companies, organizations or individuals you might need introductions to when contemplating compliance, please reach out to me at [email protected] 212-237-1106. Our transportation practice group professionals at the law firm of Windels Marx include former TLC Judges, prosecutors and other former public servants and Commissioners who are highly experienced in the evolution and application of these laws, as well as tax, corporate and employment lawyers. Our team would be happy to assist if you do not have a plan, or to comment on your actions to date to make sure you are not missing anything.
Starting January 1, 2019, for-hire vehicle bases will need to add a $2.75 per trip surcharge to fares on intrastate trips that travel in or through Manhattan, south of and excluding 96th Street (the “congestion zone”). In March 2018, New York State amended its tax law to impose the surcharge to help fund repairs and improvements to the New York City subway system. Passengers will get a discount for taking medallion taxis and pool vehicles – $2.50 per trip in a yellow taxi and $0.75 per passenger if they take a pool vehicle. The surcharge does not apply if the trip does not start and end in New York State or if the trip is provided by or on behalf of the Metropolitan Transportation Authority (MTA), including paratransit services
Any base that dispatches vehicles in the New York City area will be affected by the surcharge, not just those bases licensed by the TLC. Vehicle bases should already be thinking about compliance. Like sales tax on trips, bases will be responsible for collecting and remitting the surcharge directly to the NYS Department of Taxation and Finance (NYSDTF) for trips that they dispatch. Anyone who will be responsible for collecting the surcharge must register with NYSDTF online and file monthly returns using the Tax Department’s Congestion Surcharge Web File application. In addition, bases will need a way to apply the surcharge to passengers’ receipts when necessary.
To comply with the Tax Department’s record keeping requirements, bases and taxi medallion owners will need to make sure that they have a system or equipment with technology capable of keeping track of the date, time and geographic location where each trip begins and ends, and where the vehicle enters and/or leaves the congestion zone, if applicable. These are just some of the records and data that FHV bases and medallion owners will need to show the Tax Department to prove the surcharge was properly applied. Anyone who fails to remit the surcharge that is due to the state will face a penalty of two times the total amount due.
Although this is a state tax, the TLC is required to assist the Tax Department with obtaining and updating information related to carrying out the congestion surcharge. The TLC proposed rules to implement the congestion surcharge industry-wide similar to how the taxicab industry has been required to pay the MTA tax surcharge for many years. The proposed rules, which were published October 8, 2018, would subject drivers to a $50 fine each time they failed to charge a passenger for the congestion surcharge. The TLC already held the public hearing on the rules, which have not yet been adopted.
Wheelchair Accessible For-Hire Vehicles
Starting in January 2019, FHV bases licensed by the TLC must either send a certain percentage of their trips to wheelchair accessible vehicles, or partner with a TLC-approved Accessible Vehicle Dispatcher (AVD) to service WAV requests. Last year, the TLC issued rules mandating that, beginning July 1, 2018, FHV bases dispatch 5% of all trips to accessible vehicles, with that number increasing each year so that, by July 2023, at least 25% of all FHV trips would be provided by WAVs.
If a base opts to meet the WAV trip mandate itself, it will need to ensure that a minimum of 5% of trips that it dispatches between July 1, 2018, and June 30, 2019 are completed by accessible vehicles – regardless of whether the passenger requested a WAV. Between July 1, 2019, and June 30, 2020, the minimum requirement is 10% of all trips. For every 100 trips that a base is short, the TLC will impose a $50 fine. Bases that fail to meet at least half of their percentage requirement could have their license revoked, or suspended for 30 days.
As an alternative, under the new FHV Wave Rule exemption, FHV bases may comply with the WAV mandate by associating with an Accessible Vehicle Dispatcher. Approved AVDs will be required to service a minimum percentage of WAV requests within given time frames. The application to become an Accessible Vehicle Dispatcher was due December 14, 2018, and the TLC is expected to post a list of approved AVDs to its website. If you intend to partner with an Accessible Vehicle Dispatcher, you have until January 13, 2019, to do so. Bases that choose this route to comply with the WAV requirements will also be required to submit additional information on the monthly trip records, including the requested pick-up time for all trips.
Minimum Driver Pay
At its meeting on December 4, 2018, the TLC voted to enact rules implementing a minimum driver earnings formula that applies to High-Volume For-Hire Service (HVFHS) providers, which are defined as bases operating under the same “doing business as” name that dispatch an average of at least 10,000 trips per day. The City Council set the stage for the formula back in August when it passed a package of laws impacting for-hire vehicles. The new TLC rules, which are expected to go into effect sometime in January 2019, set a per-minute and per-mile minimum trip pay formula for Uber, Lyft, Via and Juno drivers.
The driver earnings formula also takes into account each company’s “utilization rate,” which is a measure of the amount of time drivers spend transporting passengers verses the amount of time they are available on the app to accept trip requests. Uber, Lyft, Via and Juno (HVFHS providers) will each have their own utilization rate, which will be set by TLC and adjusted periodically based on data provided by the companies. The companies with lower utilization rates will have to pay their drivers more per trip than companies with higher utilization rates. For the first 12 months that the driver earnings formula is implemented, the TLC will use a “class-wide” utilization rate for the average of the four app companies – unless a company opts out in favor of using its own utilization rate. As of this writing, the utilization rate is not yet published. Although the current rules only apply to the HVFHSs, the TLC was also given the power to decide whether to expand the minimum payments industry-wide to all FHV drivers and the power to set minimum rates of fare for FHVs.
The TLC set new transparency requirements for all FHV bases and TLC-licensed FHV owners who rent or lease their vehicles. All bases, regardless of their size, will need to make sure that their current practices align with the transparency rules, which are expected to take on January 10, 2019. Drivers and FHV owners must receive base agreements that are written in plain language, specify all costs to drivers, and receipts itemizing all payments, deductions and charges. Similarly, vehicle owners who rent or lease their FHVs must provide drivers with lease information that is written in plain language and specifies all costs and receipts itemizing all deductions and charges. Drivers will be entitled to receive a breakdown of how much they earned and the total of their passenger fares from the base. In addition, bases will be required to pay drivers in a timely manner and provide 1099 forms that include the total mileage for trips covered by the Form 1099-K. Vehicle owners may face fines for failing to comply with the transparency requirements. For example, failing to provide a copy of the fully executed lease upon lease execution and at the driver’s request would cost the owner $500 per missing lease.
Medallion Value Task Force Driver Finances
At this time, there are a pile of bills related to the financial well-being of taxi and FHV drivers that are sitting on the Mayor’s desk for signature. The Council passed legislation to create a task force to study taxicab medallion values in the preceding 20 years, potential future sale prices of medallions and the impact of such sales on the City’s budget. The nine-member task force would be comprised of industry stakeholders, including a medallion owner who is not a taxicab driver, a medallion owner who also drives a taxi and a representative of an institution that finances medallions. The task force would have six months to issue a report detailing recommendations regarding changes to laws, rules, regulations and policies with respect to medallions. Immediately after submitting the report, the task force would cease to exist. The Council also passed legislation that would require the TLC to study the problem of medallion owner debt and determine appropriate actions to address the problem. Other legislation would require the TLC to establish driver assistance centers to provide services and information to drivers, including financial counseling, mental health counseling and referrals to non-profit organizations for additional assistance, and to engage in financial education and outreach for taxi and FHV drivers.
More Legislation, Regulations & Government Mandates, Fees and Penalties on the Way?
FHV Leasing Rules.Earlier this fall, Council Member Francisco Moya introduced legislation that would require TLC to make rules regarding financial agreements that drivers enter to obtain for-hire vehicles, including leasing, rental, lease-to-own and conditional purchase agreements. In promulgating these rules, TLC would need to take into account disclosure requirements, consumer protection practices and caps on the amounts payable.
Persistent Violator and Critical Driver Programs.The City Council recently introduced legislation that would streamline the programs related to violations that result in points on drivers’ TLC-issued licenses. The proposed amendment to Administrative Law 19-507 would consolidate and streamline the Persistent Violator rules for TLC drivers. Council Member Fernando Cabrera sponsored Int. No. 1249, which would repeal the critical driver program and amend the persistent violator program by consolidating the two rules. Critical Driver (CD) summonses were historically issued when a driver receives six or more points on his/her DMV Driver’s License within a 15-month period. If the driver accrues between 6-9 points in the specified period, he/she faces a 30-day TLC license suspension. If the driver accrues over nine points in the 15-month period, the driver faces TLC license revocation. Any driver issued a CD summons has the opportunity to subtract three points from his/her abstract by taking a class approved by the department of motor vehicles, as long as the class is taken within five years of the conviction. Under the proposed amendment, the driver can enroll in a class within three years of the judgment instead of five years. Persistent violator (PV) summonses are similar, however, they are generally only issued when a driver accrues six or more points on his/her TLC or commission issued license in a 15-month period. The new amendment would consolidate the programs and allow drivers who receive a PV summons to reduce the number of points by any course approved by the DMV (like CD summonses), instead of just courses approved by the TLC as they are now.
Cooperation with Police Investigations.Council Member Ydanis Rodriguez has proposed legislation that would require TLC licensees to cooperate with police investigations by providing records and information. If passed, this bill would require all TLC-licensed owners, drivers and bases to cooperate with police investigations by allowing police to have access to their business records in emergency situations. As drafted, owners, drivers and bases would be expected to comply with a police request immediately, whereas in a non-emergency situation, compliance would be expected following the receipt of a warrant or court order.
Port Authority Privilege Permit & FHV/Taxi Airport Access Fees.In the past, the Port Authority of New York and New Jersey has floated the idea of requiring a privilege permit and charging an “access fee” for pickups and drop-offs from the airports. Most recently, in early 2017, the Port Authority proposed a $4 per trip access fee to pay for infrastructure improvements to help it manage traffic. These fees would have been in addition to a permit that would cost from $200,000 for FHV bases averaging more than 100,000 pickups per month to $5,000 for companies averaging less than 1,000 monthly pickups. At the time, Lyft publicly praised the access fee agreement, stating it would guarantee that it can access the airports and serve riders. This is a politically complicated maneuver for the Port Authority, and 2017 and 2018 were both election years. Now that the Governor has been re-elected, and with new leadership at the Port Authority, it is very possible that the privilege permit and access fee initiatives may be placed on the front burner in the New Year.