Uber faces daily challenges and for some reason, is still finding constant and new obstacles to make it concentrate on defending itself. The latest attack comes from the State of California's regulators, where the California Public Utilities Commission has now come up with a new definition for Uber, based on Uber's operating procedures. According to a commission in the CPUC, Uber has been operating as a charter-party carrier or TCP for eight years and should be categorized as such.
A TCP is a company that pre-arranges transport, and limousines and tour buses are in this classification. If Uber is classified as a TCP, they will have to pay the maximum back fee of three years licensing as well as having to be licensed, insured and meet inspection requirements as set down by the CPUC.
The reason the CPUC reached this conclusion is partly due to Uber's own fault. On the one hand, they claim that they are only a tech company that provides an application to connect drivers with Uber customers. However, at the same time they vet the drivers, make all applicants go through a thorough application process, perform background checks, and the app is mandatory since without it the drivers cannot reach the customers. On top of this, Uber had a rating system and based on this system, control how the driver acts and works, and can remove a driver based on these control restrictions. This is what the CPUC terms "exercises extensive control," which is what Uber does to its drivers, and is what tour bus services and Limousine companies have over their drivers too, even if they don't use an app for this control.
As far as I understand, the decision is aimed primarily at Uber, but Lyft might have to fall in line if the classification goes through.
The biggest outcome of this decision would be how driver's contracts are affected, and will they remain independent contractors? However, when I looked at the CPUC page I did find one dent in their decisions, the CPUC states clearly that:
"CHARTER-PARTY CARRIERS charter their vehicles for the exclusive use of an individual or group. Examples are a group charter of a bus to go to a sporting event and the charter of a limousine for a wedding. "
Note that the wording states "charter their vehicle," according to Uber, they don't have any vehicles, they only have an app that connects Vehicle owners to their customers. If the CPUC takes this into account, then every Uber driver would become a TCP instead, and as such, the CPUC could deliver a roundhouse punch to Uber by demanding that all the "independent-contractors" register as TCP's before they start using the Uber app.
This also goes for their other classification:
"PASSENGER STAGE CORPORATIONS transport passengers between points on an individual fare basis. Examples are fixed-route bus services and "share-the-ride" airport shuttle services."
However, in the above instance it does not state "charter their vehicle" in fact it doesn't state vehicle, it just states "transport passengers" which is closer to what Uber does with its app than the TCP classification.
However, since I am not here to solve the CPUC's legal issues and how to get more money out of Uber, I leave it to the professionals to weather out this battle.
To give you more of an idea what a chartered party carried is, I add the link to the CPUC site as well as collate the basics here for you to understand.