- An Illinois bill could hold companies like Uber and Lyft liable for harm done to passengers.
- Those rideshare companies are currently exempt from liability rules for other transportation services.
Illinois legislators want to take away the special privileges of ride-hailing companies. Uber is pushing back.
The Democratic-controlled state legislature passed a bill that would subject services like Uber and Lyft to the same safety standards as taxis, buses, trains, and other means of transport. The law would make it possible to sue the companies — not just the drivers — when passengers are harmed, whether intentionally or accidentally.
If signed into law by Democratic Gov. JB Pritzker, it would eliminate an exemption in Illinois law that has protected ride-hailing companies since 2015.
But earlier this month Josh Gold, Uber's senior director of policy and communications, wrote a letter to Jaime Harrison, the chair of the Democratic National Committee, warning that such a law would affect the 2024 Democratic National Convention, scheduled to be held next year in Chicago.
The law "could lead to new barriers or eligibility requirements for drivers, which could in turn lead to fewer drivers on the road," Gold said. "Fewer drivers may mean higher wait times and less reliability. On extremely busy days, like during the convention, there might not be enough drivers to meet rider demand at all."
Separately, according to the Chicago Tribune, Gold wrote to the newly inaugurated Democratic mayor of Chicago, Brandon Johnson, to warn that "less drivers and fewer trips means the city could lose tens of millions of dollars in projected revenue from ride-share taxes."
The Illinois Trial Lawyers Association, the left-leaning consumer-protection group behind the bill, has dismissed the concerns as part of an Uber "pressure campaign" to get the state legislature or the governor "to not pass this bill or sign this bill," Patrick Salvi II, the ITLA's president, told Insider.
"These letters are somewhat veiled threats," Salvi added. Uber is "hinting at the possibility that they'll leave or have less drivers available in the event this bill passes, and that's going to be problematic for politicians that want to keep their voters happy."
This isn't the first time the ride-hailing giants have pushed back against tighter regulations. In 2020, Uber and Lyft threatened to suspend service in California after a judge ruled they had to reclassify their drivers as employees instead of independent contractors based on state law. The companies spent nearly $110 million supporting a 2020 referendum — which California voters ultimately passed — to keep drivers as independent contractors. A California judge ruled the referendum unconstitutional, and an industry-backed PAC is appealing the decision.
Neither Uber nor Lyft responded to requests for comment.
Lyft is sitting out the fight while Uber pushes for exemption from the law
The Illinois bill would define ride-hailing companies like Uber and Lyft as "common carriers" like taxi and bus operators, opening them to further liability in the event of accidents or other situations in which passengers are harmed, Salvi said. Being a common carrier means if a taxi driver tried to beat a yellow light and crashed, the passengers could sue the cab company, arguing that the company exercised enough control over its drivers to be held liable for the harm done, he elaborated. It would then be up to a court whether to hold the company liable based on the proof.
Salvi said Illinois exempted ride-hailing companies from the state's common-carrier civil-liability doctrine in 2015 to "allow them to come to market" and "give them an ability to compete."
"But that ship has sailed," Salvi said. "They've now essentially crushed the competition."
He added, "The taxi cab industry in Chicago's been decimated." By 2017, revenue fell by 40% over the previous three years, and 42% of Chicago cabs weren't even operating.
Moreover, the exemption has protected ride-hailing companies in even more extreme cases. In 2020, an Illinois court ruled Lyft was not liable for a driver who sexually assaulted a female passenger at knifepoint because ride-hailing companies were not considered common carriers under the law, even though the plaintiff alleged that the driver "had been hired as a Lyft driver despite his criminal history, including charges of theft, driving under the influence, and possession of weapons."
In 2021, Lyft reported that it had received more than 4,000 reports of sexual assault from its US users from 2017 to 2019, and Uber said users reported more than 3,000 cases of sexual assault on its platform from 2017 to 2018. In its 2019-2020 report, Uber said the rate of sexual assaults reported on the app decreased by 38% from its prior report, attributing that to the company's "safety and transparency efforts" and the "altered usage of the platform" during the COVID-19 pandemic.
Salvi argued that if Pritzker signed the bill into law, ride-hailing companies would upgrade the security of their driver recruitment and review procedures "as to how passengers and drivers are interacting, that they have safeguards and a culture and just communications with their drivers that — that is safety-focused."
As common carriers, Uber and Lyft would also be held to the "highest duty of care," which could make them liable if their drivers got into car accidents, he added.
Uber, Lyft, and the Chicagoland Chamber of Commerce originally opposed the bill on the grounds that the companies already had safety measures in place, that their services took drunk drivers off the road, and that regulation would reduce the supply of drivers and drive up prices.
Salvi took issue with Uber's argument that higher standards for recruiting drivers would reduce its supply. "I don't think higher standards for background checks is going to scare away anybody," he said, adding that in his experience drivers "are almost invariably very good people."
He also noted differences between Uber's reaction and that of Lyft, which he said "went neutral on the bill" when amendments made clear that drivers wouldn't automatically be considered Lyft's agents, the bill wouldn't take effect until a later date, and the bill would last five years instead of one before needing to be reenacted.
"Lyft would be all too happy" if Uber "left Chicago and left that market for Lyft," Salvi said, adding that so would taxi cabs, which he said had been "basically driven out of business in the city of Chicago as a result of rideshare companies who have an unfair market advantage not being considered common carriers."