Entrepreneur Carla Mays has been encountering a frustrating situation over the past couple of weeks when she orders an Uber. Drivers have refused to take her from Berkeley, California, to the city where she lives and where Uber is headquartered, San Francisco.
The drivers tell her they have not met business registration requirements. In April the Office of the Treasurer and Tax Collector in San Francisco announced it had notified 37,000 people identified as drivers for transportation network companies, or TNCs, of a new effort to enforce the requirements. A grace period for drivers lacking the registration ended August 31.
“This is something Uber should be paying for if this is a part of them having drivers, because a lot of folks are doing this to make ends meet,” Mays says.
Tweets from riders directed at @Uber_SF show Mays is not alone in struggling to get a ride. It’s unclear whether this issue is also impacting Lyft, but the San Francisco requirement applies to both companies and many drivers operate on both platforms.
Uber and Lyft tell Inc. that drivers don’t see a rider’s destination until a ride has started, which comes after they accept the ride. The companies say they have notified drivers of the requirement, and Lyft outlined the details in a section on its website.
“It’s something we tried hard to fight, but San Francisco drivers are required by the city to have a business license (called a Business Registration Certificate),” the section reads.
The cost of a license is $91 per year of activity, and late fees for drivers who did not register by August 31 total $155 (late fee plus administrative fee), according to the city treasurer’s office. The fees increase each month by one percent.
For a driver who started driving in August of 2015 who has not registered, late fees and registration costs would amount to $337. The amount would be greater if the driver started in an earlier year, though annual costs were lower prior to August 2015.
There is an exception, according to treasurer’s office spokeswoman Amanda Fried: Drivers have the option of stating they are exempt on grounds they are employees and not contractors of Uber or Lyft, and therefore are not operating their own businesses.
“The court cases are very much pending on their employment status,” says Fried, referring to a lawsuit Uber faces in San Francisco, brought by drivers who claim they should be classified as employees rather than independent contractors. The scope of the lawsuit recently narrowed from including all California Uber drivers to including only a subset.
Lyft reportedly settled a lawsuit in the state dealing with classification issues earlier this year.
Controversy over whether drivers for the ride-hailing services should classify drivers as employees or contractors has been a thorn in the startups’ sides elsewhere in the country as well, spurring debate in the press and sometimes leading to lawsuits.
Fried writes in an email that more than 18,000 ride-hailing drivers registered by the August 31 deadline for required licenses, “and an additional 12,000 responded via our declaration portal that either they are no longer driving in SF, already registered, or consider themselves employees (not independent contractors).”
Fried declined to comment on how the city was enforcing the license requirement. But Mays’s experiences may provide some clues about the effect the enforcement effort is having.
In one experience Mays describes, an Uber driver arrived and immediately explained that she could not take Mays to San Francisco because she could not afford to register for the business license. A second driver took Mays as far as the Bay Area city of Emeryville before refusing to drive farther. A third driver took Mays to the city, but when he saw a police cruiser in San Francisco he decided to drop Mays off before reaching her destination.
“He took me in, but he was paranoid the whole time,” Mays says.