TRENTON - New Jersey lawmakers are weighing how to regulate popular ride-sharing services such as Uber and Lyft, which have transformed transportation in cities across the country but left operators of taxis and limousines crying foul over perceived competitive disadvantages.
Dozens of cabdrivers packed a Senate Transportation Committee hearing Monday, calling for legislators to pass a bill that would place ride-sharing services under the same regulatory framework as limousine companies.
Jeffrey M. Shanker, president of the Limousine Association of New Jersey, said ride-sharing services should be subject to the same regulations as his industry because they offer the same services.
Ride-sharing companies "think they are something new, and something that should be unregulated," he said. "They are not. They are a taxi or limousine."
As a result, they should be forced to collect sales tax, submit to background checks, and buy commercial insurance, Shanker said.
The companies said the legislation would make it impractical to operate in New Jersey, leaving consumers with fewer choices and drivers with fewer opportunities to make money.
Lawmakers only heard testimony Monday and did not vote.
San Francisco-based Uber and Lyft, and other so-called transportation network companies, allow consumers to connect with drivers through smartphone apps and prepay for their rides online.
In June, Colorado became the first state to implement a regulatory framework for such companies, according to the National Conference of State Legislatures. Legislation to regulate ride-sharing companies was introduced in Harrisburg last year.
The Philadelphia Parking Authority has banned Lyft and UberX, the company's least expensive service offered by drivers using their personal vehicles. Both still operate in the city, risking fines.
Both have two-year authority to operate elsewhere in Pennsylvania from the Public Utility Commission, which regulates taxis outside Philadelphia.
The New Jersey Department of Banking and Insurance warned consumers in May that car-sharing may not be insured.
Companies "may have an insurance policy that purports to cover the driver and passengers while the vehicle is transporting a paying passenger," the department said in a news release. "However, New Jersey consumers should be aware that these policies are not reviewed by the department."
"Further, being covered by different policies for different uses of the vehicle is a new concept that has not been tested under our state's laws and in our courts," it said.
Taxis in New Jersey are regulated by municipalities, which award medallions, while limousine companies must have statewide licenses.
Under one proposed bill, ride-sharing companies would be regulated in the same way as limousines. Drivers would need to submit to criminal background checks with the state police to obtain an endorsement from the Motor Vehicle Commission. They would also need to file $1.5 million insurance policies.
The bill "unquestionably threatens" the ride-sharing model, said Nicole Benincasa, Uber's policy representative for New Jersey.
It fails "to embrace the reality" that transportation network companies "are new, innovative, and different," she told lawmakers.
For example, she said, Uber does not own any vehicles or employ drivers, whom it considers independent contractors. Uber drivers offer their services part-time, whereas cabs and limousines are driven solely for commercial use, Benincasa said.
Another bill, which would deem the drivers to be independent contractors, moves in the right direction but is still flawed, she said.
Uber itself conducts "far-reaching" background checks, she said, and the company's part-time drivers shouldn't be subject to drug tests, as the measure proposes.
Paul A. Rosenberg, president of Atlantic City Yellow Cab Co., saw similarities between taxi services and the ride-sharing networks.
"They are spending millions - Lyft with their pink mustaches, and Uber with their app - as a commercial enterprise to advertise themselves and make themselves household names to operate for hire," Rosenberg said. "That's exactly what we do."
Ride-sharing services have put taxis at a competitive disadvantage, said Seth Hahn, legislative director for the Communications Workers of America.
When demand increases, companies such as Uber often raise prices, while taxis are prohibited by municipalities from doing so, he said. Taxi companies also have to pay state business taxes and cover workers compensation, unlike ride-sharing firms.
Diana Dellamere, public policy manager for Lyft, said her company envisions itself as a carpooling service, and the proposed regulations would reduce it to a competitor to taxis.
"We want there to be regulations that recognize what the end goal of this model is," she said.
Some believe the damage inflicted by Uber and Lyft on the taxicab industry already is irreversible.
"In six months, they destroyed the world," said Matias Paul, vice president of the Newark Cab Association.