CHAPTER 8

Regulatory Framework

Introduction

Federal laws, regulations, and guidance affect transit agencies’ planning, implementation, and operation of alternative service programs for ADA paratransit riders. The components of this regulatory framework are identified in this chapter, along with their applicability to alternative services.

It is important to state that this research report does not provide legal advice or formal guidance related to transit agencies’ use of alternative services. TCRP Legal Research Digest 53 is a relevant legal resource for transit agencies interested in working with ridesourcing providers to provide on-demand services. It also discusses taxi regulations, which may be helpful for planning and implementing an alternative service. Significantly, among its best practice recommendations is that “legal counsel and risk managers should be involved from the inception of program design and the contracting process” (Waite 2018).

Definitions of Regulatory Framework Terms

Laws can be defined as enforceable rules governing a society. Laws generally encompass statutes but are also sometimes understood to include other legal authority, such as executive orders and regulations, that applies to a given subject matter and that may impose compliance or other obligations on the affected parties.

Statutes are laws that have been enacted by a legislative branch (e.g., Acts of Congress) and that provide legal authority and often enforcement mechanisms. The ADA is a statute enacted by Congress in 1990 and signed into law on July 26, 1990, by then-president George H. W. Bush. It is commonly referred to as an act—the Americans with Disabilities Act.

Regulations are legal authority promulgated by the executive branch or by independent agencies and are generally issued to implement statutes or to interpret provisions of such statutes, consistent with legislative acts. The authority of agencies to promulgate regulations is generally provided by statute. Relevant for this study, the U.S. DOT published regulations implementing provisions of the ADA in 1991 (49 CFR parts 27, 37, 38 and 39). The FTA is responsible for ensuring that public transit agencies comply with the DOT regulations that implement the public transportation-related provisions of the ADA.

Guidance generally includes written administration pronouncements issued by the executive branch or independent agencies, e.g., the FTA. Such guidance may clarify the meaning of certain provisions of statutes and regulations or help agencies or other affected parties with their application. Guidance may also explain how an administration agency will administer statutes and regulations. Guidance of this type does not have the force of law but provides important information

for affected agencies and others. For example, the FTA provided guidance to the transit industry about the DOT’s ADA regulations in 2015 in the form of Circular 4710.1. The FTA has also provided guidance on its website about transit agencies’ use of ridesourcing providers (sometimes referred to as TNCs by the FTA).

Standards encompass a range of norms and practices considered applicable to transit agencies and others, and that may be based on regulations and other guidance, and occasionally on statutes. Standards may be incorporated as an element of statutes, regulations, or guidance.

As one example, the FTA has established a standard for the pickup window for ADA paratransit trips by stating that it “considers pickup windows longer than 30 minutes in total to be unacceptable” (FTA 2015).

Table 8-1 shows the federal statutes and regulations discussed in this chapter. Some of these are clearly relevant for alternative services; several were reviewed as potentially relevant. The table includes the formal legal references, which may be of interest to public transit agencies’ legal staff. For the purposes of this guide, we use terminology more common among planners and operators in the transit industry; these are indicated in parentheses in the table.

Table 8-1. Federal statutes and regulations reviewed for this study.

Federal Laws, Regulations, and Guidance

ADA

The ADA of 1990 is a federal law providing a comprehensive framework and approach for ending discrimination against persons with disabilities (Thatcher and Gaffney 1991). The law’s five titles address employment, public services, and public accommodations and services provided by both public and private entities.

Public transportation is addressed in Titles II and III, with Title II covering public entities and Title III covering private entities. Title III differentiates between private entities providing transportation as a primary business, such as taxis, and those providing transportation as a secondary business, such as a hotel shuttle service for guests.

After passage of the law, the U.S. DOT adopted regulations implementing the transportation-related requirements of the ADA, with the FTA responsible for ensuring compliance by public transportation agencies. The regulations were written so that compliance with ADA regulations is a condition of compliance with Section 504 of the Rehabilitation Act of 1973, federal legislation preceding the ADA that prohibits entities receiving federal funds from discriminating against people with disabilities. ADA regulations that cover service-related requirements for public transit agencies, which are the focus of this research, are codified in 49 CFR Part 37 (FTA 2015).

ADA Regulations and Guidance

ADA regulations are many and prescriptive; some apply to alternative services and some do not.

• The ADA applies regardless of federal funding. ADA regulations apply to public and private transportation providers and, significantly, apply whether or not the entity receives federal funding.
• Alternative service providers do not “stand in the shoes” of a transit agency. When a transit agency enters a contract or other arrangement, for example, a grant, subgrant or cooperative agreement, or relationship with a private entity to provide fixed-route or demand-response service, ADA regulations require the transit agency to ensure the private entity meets the service-related requirements that the transit agency must follow as if it were operating the service itself. The private entity “stands in the shoes” of the transit agency (FTA 2015).

But when a transit agency enters into an arrangement with a private provider such as a TNC or taxi company to provide an alternative service, the “stand in the shoes” requirement does not apply when the transit agency only provides subsidies to the private provider “to underwrite” its riders’ use of the private providers’ service, such as those given to ADA paratransit riders for alternative on-demand taxi and TNC services (FTA 2015). Yet, a transit agency partnering with a TNC or taxi company for the provision of service is responsible for ensuring that service meets ADA requirements.

• Service criteria for ADA complementary paratransit do not apply. Alternative services are designed for individuals with disabilities who are eligible for ADA paratransit, but the regulations that establish the six service criteria for ADA paratransit do not apply. This is because alternative services are by definition provided on a same-day and typically on-demand basis, which goes beyond the next-day service requirement for ADA paratransit.

  Services that go beyond ADA paratransit requirements fall into the category of services the FTA refers to as premium. Specifically, the FTA has explained through its ADA guidance that transit agencies that provide services above and beyond regulatory obligations under the ADA are not subject to the six service requirements for ADA complementary paratransit. Transit agencies can therefore “establish ‘premium charges’ for such services.” Among the services listed in the guidance is service that exceeds the basic next-day service requirement,

which is a key characteristic of alternative service for ADA paratransit riders with same-day, on-demand service (FTA 2020a).

• Service equivalency for demand-response service. Generally, vehicles accessible to people with disabilities, including people who use wheelchairs, must be used. However, ADA regulations specify that demand-response service, which is the mode used for alternative services, may use inaccessible vehicles if the service, when viewed in its entirety, gives people with disabilities, including wheelchair users, the same level of service as those without disabilities, as measured by seven criteria.

Service equivalency criteria

1. Response time
2. Fares
3. Geographic area of service
4. Hours and days of service
5. Restrictions or priorities based on trip purpose
6. Availability of information and reservation capability
7. Any constraints on capacity or service availability

The service equivalency regulation applies to demand-response services for the general public, so equivalency is compared between service for people without disabilities and people with disabilities, including those who use wheelchairs. While alternative services are not general-public demand-response service, they are demand-response service designed for a subset of the general public: ADA paratransit riders. Further, 49 CFR § 37.5 provides that no entity shall discriminate against an individual with a disability in connection with the provision of transportation service. Accordingly, the FTA has determined that all rider subsidy programs administered by transit agencies, including those provided only for ADA paratransit-eligible riders, must be operated in a way that provides equivalent service to individuals with disabilities, including individuals who use wheelchairs (see www.justice.gov/usao-ma/pr/mbta-resolves-allegations-ada-violations).

FTA guidance on service equivalency requirements makes it clear there are various types of demand-response services, such as those operated as taxi subsidy programs and route deviation as well as for subsets of the general public, including people with disabilities and seniors. FTA guidance on taxi subsidy programs, for example, which transit agencies may use for their alternative services, discusses service equivalency for such programs: taxi subsidy programs provided by transit agencies using FTA funding are subject to the equivalent service requirements. The guidance specifically addresses the response time criterion. Accordingly, “transit agencies operating taxi subsidy programs must monitor response times for riders with disabilities, including those who use wheelchairs, to ensure these riders experience comparable response times to other riders” (FTA 2015, pp. 7–9).

As applied to ridesourcing entities, the FTA’s guidance on shared mobility says that “a transit system partnering with a ridesourcing entity to provide demand-responsive service to a new service area would have to ensure not only that accessible vehicles were available, but that any person requiring an accessible vehicle would not be charged more than a typical ridesource user for a similar trip and would not have to wait longer for service” (FTA 2016).

Meeting Service Equivalency Criteria

To meet equivalency on most of the seven service criteria, transit agencies can set policies for their alternative services regarding fares, service area and span, and trip restrictions, which apply to all ADA paratransit users—those who use wheelchairs and other mobility devices and those who do not. This is usually relatively straightforward. Achieving response time and availability

of information and reservations capability service equivalency for all ADA paratransit users, including those who use wheelchairs and other mobility devices, merits additional attention.

Response Time

Guidance from the U.S. DOT in the form of a Dear Colleague letter in 2016 reminded transit agencies of their obligation to provide equivalent service for riders who use wheelchairs when using TNCs and specifically of the requirement for an equivalent response time:

This is further stated in FTA guidance on shared mobility and the ADA. Should a transit agency partner with a TNC for demand-response service, the transit agency must ensure, among other requirements, that a rider who needs an accessible vehicle “would not have to wait longer for service” than a typical ridesource user for a similar trip (FTA 2016).

This guidance would also apply to such services if inaccessible taxis were used. If the transit agency-sponsored taxi-based subsidy program for ADA paratransit riders was serviced by taxi companies that collectively had no or very few wheelchair-accessible taxicabs, so eligible riders who require an accessible vehicle either could not use the service or experienced longer response times, the service would not be in compliance with the ADA.

FTA guidance also holds that should a transit agency use ridesourcing to provide “real-time service” for its paratransit riders, those riders who use wheelchairs must also be provided real-time service:

More recent insights on ADA equivalency requirements for WAV trip response time for an alternative service come from a February 2022 agreement between the MBTA and the U.S. Department of Justice. This agreement resolves complaints that date to 2017 about the response time for WAV trips on the transit agency’s on-demand pilot service for ADA paratransit riders operated by Uber and Lyft. The Department of Justice’s position on response time equivalency is stated in a letter of resolution that documents the agreement: “it is the Department’s position that ride subsidy programs administered by transit agencies must be operated in a way that provides equivalent service to individuals with disabilities, including those who use wheelchairs” (see www.justice.gov

/usao-ma/pr/mbta-resolves-allegations-ada-violations; the letter of resolution is attached as a PDF). The agreement requires that the MBTA provide a “reasonably comparable” response time for ADA paratransit riders needing a WAV and further states the transit agency has met this requirement with a documented average wait time for a WAV trip of 13 minutes after revisions were made to the pilot’s provision of WAV service (more information on the MBTA’s alternative service for ADA paratransit riders is in the MBTA case study in Appendix A).

Availability of Information and Reservations Capability

Using TNC services typically requires a smartphone, so what about people who don’t have one? Transit agencies are obligated to address the service criterion of information and reservations capability; service equivalency issues can arise particularly with reservations capability if the rate of access differs substantially between alternative service riders who have smartphones and those who do not. There may also be compliance issues with Title VI of the Civil Rights Act of 1964 if there are differences with smartphone access based on race, ethnicity, or national origin. The FTA monitors its grantees—public transit agencies—to confirm they comply with all applicable civil rights statutes and regulations, including Title VI. Thus, smartphone access may affect both the service equivalency requirement and the Title VI requirement.

Title VI of the Civil Rights Act of 1964

Title VI of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, and national origin in programs and activities that receive federal financial assistance, and the U.S. DOT has issued regulations for implementing Title VI. The FTA’s Office of Civil Rights is responsible for ensuring that transit agencies receiving federal funding comply with Title VI (FTA 2020b).

Compliance with Title VI has been broadened through regulations to include requirements that transit agencies receiving federal funds must also ensure their programs and service do not result in disproportionately adverse impacts on minority populations and LEP persons (Office of the Federal Register 2012). Waite (2018, p. 27) identified three distinct areas of Title VI that may be issues when ridesourcing providers such as TNCs are used:

1. Discrimination by drivers based on race or ethnicity
2. Language accessibility to services
3. Low-income access (including disproportionate lack of access based on race due to limited access to smartphones/mobile banking)

FTA guidance for transit agencies’ compliance with Title VI is provided in Circular 4702.1B, which identifies transit agencies’ obligations regarding Title VI and that transit agencies are responsible for ensuring their contractors and subcontractors comply with Title VI requirements (FTA 2012).

Title VI Applies to ADA Paratransit

The FTA addresses Title VI requirements for ADA paratransit through guidance, making clear that “a transit agency’s ADA complementary paratransit service as well as its fixed-route service must comply with Title VI” (FTA 2020b).

Relevance to Alternative Services

Waite (2018) notes that while the FTA’s guidance in its Title VI circular does not address ridesourcing, it reports that the circular does provide a caution to transit agencies that their activities not specifically described in the circular, or not funded by the FTA, must still comply with Title VI.

The U.S. DOT’s Dear Colleague letter states that Title VI requirements apply to transit agencies’ partnerships with TNCs:

According to Waite (2018), the FTA guidance in the Dear Colleague letter follows from the fact that transit agencies’ receipt of federal funds makes their TNC service subject to Title VI even if federal funds are not used for the TNC service itself.

Regarding whether Title VI compliance applies when transit agencies partner with TNCs, Curtis et al. (2019) notes that “FTA guidance . . . advise[s] that while Title VI applies to partnerships when federal funding is used, it encourages its funding recipients to keep the spirit of Title VI in mind when designing partnerships with TNCs.”

Does Title VI Apply to Alternative Services?

The FTA’s Circular 4702.1B confirms that Title VI applies to alternative services provided by transit agencies that receive FTA funding because “the Civil Rights Restoration Act of 1987 clarified the broad, institution-wide application of Title VI.” Specifically, Title VI applies to “all of the operations of covered entities,” which includes public transit agencies, “without regard to whether specific portions of the covered program or activity are federally funded.” Such an “activity” would include a transit agency’s alternative service, regardless of the source of funding for the alternative service.

FTA Drug and Alcohol Testing Requirements

Under federal transit law, transit agencies that receive funding through FTA grant programs for urban and rural areas are required to comply with drug and alcohol testing of staff in safety-sensitive positions, including those operating, dispatching, and maintaining revenue service vehicles.

The requirements also apply to transit agencies’ contractors and subcontractors. The arrangements for contractors and subcontractors may be formal, such as a written contract, or an informal arrangement “that reflects an ongoing relationship between the parties” (49 CFR 655.4).

On their face, these requirements apply to the providers of alternative services. And they do, with one exception—the taxicab exception.

Note that the FTA has provided useful information and guidance on the requirements for drug and alcohol testing on its website under “Shared Mobility Frequently Asked Questions,” www.transit.dot.gov/regulations-and-guidance/shared-mobility-frequently-asked-questions.

Taxicab Exception

FTA shared mobility guidance states that the testing requirements apply to employees and independent contractor drivers of contractors that do not otherwise directly engage in public transportation operation, including taxi and ridesourcing companies, unless the “taxicab exception” applies. FTA guidance specifically states that ridesourcing companies may qualify for the taxicab exception (FTA 2018).

As provided by the FTA, the taxicab exception states:

The FTA provides further guidance on the taxicab exception:

The FTA also addresses pilot projects, which transit agencies often use to implement and test an alternative service for their ADA paratransit riders. Accordingly, while the FTA did give drug and alcohol testing exemptions to transit agencies that did not use any FTA funds for up to one year under certain circumstances, it ended that exemption in 2018 except for pilots already underway that were using the exemption. Specifically, the FTA’s guidance states:

FTA guidance further states that if a transit agency contracts with two or more ridesourcing companies and one (or more) taxi company(ies) to provide accessible vehicles, the taxicab exception applies even though the taxi company may be the only contractor with accessible vehicles or may be the only contractor to schedule trips by telephone or accept cash payment. According to the FTA, “while some passengers may have only one choice, this does not change the fact that many passengers will have more than one choice, and so the taxicab exception will apply to all of the providers” (FTA 2018).

Questions Concerning the Taxicab Exception

First, the language of the FTA guidance refers to contracting with two or more ridesourcing companies and one (or more) taxi company(ies), the latter involved to provide accessible vehicles or to allow trip scheduling by telephone or cash payment for a trip. While the language refers to “two or more ridesourcing companies,” the FTA holds that as long as all riders may choose between the ridesourcing company and the taxi company—except those needing an accessible vehicle, telephone scheduling, or cash payment—there is a choice. If riders who do not require the accommodations provided by the taxi company are directed or encouraged to use the ridesourcing company, then there may not be a choice and that could be an issue from the FTA’s perspective regarding the taxicab exception.

Second (and related to the first question), note that the guidance as stated, which is built on the theory that riders can choose their provider, does not give that same choice to riders who need an accessible vehicle, since “some passengers [i.e., those who require an accessible vehicle] may have only one choice.” Having one choice is not a choice; those riders can use only one provider. It seems not to give riders needing an accessible vehicle the same level of service—equivalent service—as riders who do not need an accessible vehicle.

And third, a question arises with a review of drug and alcohol testing requirements that apply to taxi companies under the Federal Motor Carrier Safety Administration (FMCSA) regulations (49 CFR Part 382). While the FMCSA regulations require drug and alcohol testing for operators of commercial motor vehicles, no testing is required for operators of other vehicles. According to FMCSA definitions, automobiles used for taxi and TNC service are not commercial motor vehicles. Is there a greater need to protect passengers when a taxi or TNC vehicle is being used to provide public transportation regulated by the FTA than when the same vehicle is being used for passenger transportation regulated by the FMCSA?

If the FTA’s regulations matched FMCSA’s, there would be no need for the taxicab exception or the somewhat complicated guidance on drug and alcohol testing to account for differing numbers and types of providers with or without accessible vehicles.

National Transit Database

Transit agencies that receive federal grant funding through the Urbanized Area Formula Grants (Section 5307) or Formula Grants for Rural Areas (Section 5311) are required to report operating, financial, and asset data to the NTD. The FTA uses certain NTD data as factors to apportion funds to the urban and rural areas, including revenue miles data. The reported data, then, benefit the transit agencies (see www.transit.dot.gov/ntd/what-national-transit-database-ntd-program).

Reporting requirements are spelled out by the FTA annually in the NTD manual, which is intended to clarify “existing requirements under the law or agency policies.” While the FTA states at the beginning of the 2020 manual that its contents “do not have the force and effect of law,” an introductory chapter makes clear the importance of NTD reporting: “transit agencies must report to the NTD and follow the requirements listed in this manual” in order “to be eligible to receive funding from FTA” (NTD 2020).

Services Operated In-House versus Contracted

NTD reporting requirements distinguish between services that a transit agency operates in-house (referred to as directly operated, DO) and services a transit agency contracts for (referred to as purchased transportation, PT). Alternative services by definition are services a transit agency provides via an agreement with a provider and therefore can be considered purchased. Regarding purchased transportation, the NTD refers to the transit agency as the “buyer” and the provider as the “seller.”

Purchased Transportation

To qualify as purchased transportation for the purpose of NTD reporting, the purchased service must meet specific criteria.

The NTD recognizes three types of purchased transportation: (1) taxi service (TX), (2) TNC service (TN), and (3) general purchased service (PT).

Taxi service (TX). Purchased taxi service may be operated with nondedicated vehicles, such as is done for an alternative service, or taxi service may provide dedicated ADA paratransit service for a transit agency, in which case it is reported in the third category, PT.

The NTD manual states that voucher programs are not considered public transportation (NTD 2020, p. 35), in which case, they are not eligible for reporting through the NTD.

Transportation Network Company (TN). The NTD refers to this as a “special type of service” provided by a TNC for a transit agency using nondedicated vehicles.

Purchased Transportation–General (PT). This is service purchased from a public or private transportation provider that does not fit the first two categories, taxi or TNC service. PT services include all purchased transportation that uses dedicated vehicles, including those operated by a taxi company.

The 2020 NTD manual has a new section that details whether and how a transit agency may include TNC data in an appendix titled “Shared Mobility Partnerships with TNCs.”

When Can TNC Service Be Reported?

According to the manual, a transit agency may be able to include data from TNC service in its NTD report in the TN category if the TNC service meets all the criteria for public transportation as defined in 49 U.S.C. Section 5302(14), which specifies:

Thus, TNC data can be reported if the transportation service meets the following criteria:

• It is “regular, continuing, shared-ride surface transportation service that is open to the general public or a segment of the general public defined by age, disability, or low income,” which would include ADA paratransit-eligible riders. This definition excludes pilot projects as they do not meet the definition of regular and continuing.
• It is operated under contract, in which case it must meet the FTA’s definition of purchased transportation.
• It must be shared-ride. For a TNC, this means the TNC groups passengers together according to their trip origins and destinations and neither driver nor passengers can decline additional passengers if there is room. Not every trip must be shared-ride to qualify, but all rides reported to the NTD should involve an “active attempt to share rides.” The definition suggests that an alternative service provided through services such as UberPool and LyftLine would qualify.

If the TNC service meets the criteria for NTD reporting, the NTD manual specifies that the transit agency would report financial, service, and asset data for the TNC service. This includes such data as:

• Unlinked passenger trips
• Vehicle revenue miles
• Vehicle revenue hours
• Passenger fares
• Operating expenses
• Sources of revenue
• Information regarding the assets used to provide the service

What Does This Mean for Reporting Alternative Services Data to the NTD?

Given the definition of public transportation in 49 U.S.C. 5302(14), the 2020 NTD manual requirements for data reporting appear to limit transit agencies’ ability to report data on their alternative services, particularly given the requirement that the service be shared-ride. Generally, transit agencies’ alternative services using nondedicated providers such as TNCs and taxis are not shared-ride. In fact, the opportunity to receive a solo ride with the alternative service is often one of the appealing features for ADA paratransit riders and one that the transit agency sponsor may highlight.

If a transit agency designs its alternative service so that it meets the applicable requirements, e.g., shared-ride service, not a pilot, specified data submitted by the providers, then the agency should be able to include data from the alternative service in its annual NTD submission. This would require the TNC to give the required data to the transit agency.

Data Beyond the NTD

Transit agencies may not be able to include data from their alternative services with their NTD report submissions, yet they need data to monitor and evaluate the services. They may also need certain data to comply with state, local, or their own agency’s requirements for data reporting.

The literature review found that data reporting has been an issue, with transit agencies not able to obtain all the data they would like and/or data at the disaggregated level to allow more fine-grain evaluation of the service. Recent research suggests this issue may be subsiding. According to Shurna and Schwieterman (2020), many transit agencies were satisfied with the data received from their TNC providers.

Federal Labor Laws

The United States has hundreds of federal employment and labor laws that affect employers and employees. Two of these are addressed here: Section 13(c) and the classification of workers as employees or independent contractors.

Section 13(c)

Section 13(c) was a section in the former Urban Mass Transportation Act and the term Section 13(c) continues to be used to refer to its replacement at 49 U.S.C. Section 5333(b).

Section 13(c) requires certification by the U.S. Department of Labor that there are fair and equitable arrangements protecting transit employees affected by the federal assistance before the FTA provides the grant assistance to public transit agencies. Among other provisions, Section 13(c) requires that the arrangements allow for the continuation of collective bargaining rights and the protection of employees against a worsening of their positions.

The U.S. Government Accountability Office (GAO) has reported that Section 13(c) has had a minimal impact on public transit agencies’ operations, though the transit agencies surveyed by the GAO indicated there has been some impact on their ability to contract for fixed-route transit services. However, the impact has not been on paratransit services since historically paratransit services have been contracted out (GAO 2001). Despite the GAO’s findings on fixed-route contracting, Section 13(c) has not been an actual roadblock to contracting out transit service, according to Waite (2018).

Regarding public transit agencies’ ability to pursue an alternative service for ADA paratransit riders, Section 13(c) is not seen as an issue, predominately because such services are an addition to the transit agency’s offering; they do not replace a service operated by a transit agency’s employees. Moreover, transit agencies have historically used contracting for paratransit services without concerns or impacts from Section 13(c) (GAO 2001).

Classification of Workers as Employees or Independent Contractors

One of the labor issues identified for this research is the classification of workers as employees or independent contractors.

Various federal laws affect employment classification, including for example the National Labor Relations Act of 1935, which protects the rights of employees and employers and, among other provisions, encourages collective bargaining (www.nlrb.gov/guidance/key-reference-materials/national-labor-relations-act). Employment classification also affects various legal issues under state law, such as claims for unemployment insurance and minimum wage laws (Waite 2018).

Employment status is also an issue for the Internal Revenue Service (IRS) and federal employment taxes. Generally, the IRS requires an employer to withhold and pay income taxes, social security taxes, Medicare taxes, and unemployment taxes on wages paid to an employee, but an employer, again generally, does not have to withhold or pay any taxes on payment to an independent contractor (IRS website, www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee).

The IRS uses “common law rules” to determine employment status, for example, the degree to which the employer has a right to control or direct the business and financial aspects of the worker’s job.

Using independent contractor drivers, the typical business model for taxi companies and TNCs, means the companies do not have to follow IRS rules regarding federal employment taxes.

Laws and Regulations for Commercial Motor Vehicles

Federal Laws

Federal laws and regulations related to commercial motor vehicles may be relevant for transit agencies’ use of alternative services. These laws and regulations are complex, and a review of them is beyond the scope of this research; they are simply identified here as they may be relevant.

Might Federal Motor Carrier Laws Be Relevant for Alternative Services?

The Federal Motor Carrier Safety Administration (FMCSA) regulates interstate transportation by commercial motor vehicles, including buses and other passenger transportation providers (U.S. DOT 2017).

Should a transit agency’s alternative service involve interstate transportation? Even if it provides a feeder trip to another transportation service that crosses state lines, the alternative service provider may come under the jurisdiction of the FMCSA. Approval from the federal Surface Transportation Board—a federal agency charged with the economic regulation of various modes of surface transportation—may also be relevant (see https://prod.stb.gov/about-stb).

These laws and regulations are complex and have various exceptions, including, for example, for defined taxicab service. Whether there is any relevance to a transit agency’s alternative service should be the purview of the agency’s legal counsel.

Definitions of Taxicabs and TNCs

The FMCSA does not regulate vehicles that provide taxicab service, but in making that exclusion gives a federal definition of taxi service.

The term taxicab service is defined as passenger transportation in a motor vehicle with capacity of eight or fewer passengers (including the driver), and either (1) the vehicle is licensed as a taxicab by a state or local jurisdiction, or (2) local transportation is provided for a fare determined primarily on the basis of distance, and the primary transportation provided is not to or from airports (Federal Motor Carrier Regulations, 49 U.S.C. Section 13506(a)(2)).

States’ TNC Regulations Define TNCs

At least 45 states have adopted the National Council of Insurance Legislators (NCOIL) model act to regulate TNCs (Curtis et al. 2019). This model act, developed in 2015, provides rules for insurance coverage requirements, financial responsibility, licensing, disclosures, and other issues. The model act and its language were intended to help states address controversy regarding TNCs while updating state laws to regulate then-new TNCs.

The model act’s definition of a TNC and a TNC driver states that TNCs are not motor carriers:

A TNC or a TNC driver is not:

1. a common carrier,
2. a contract carrier, or
3. a motor carrier.

Other parts of the model act provide language for a state to use to define a TNC and TNC driver; in summary, a TNC “means a corporation, partnership, sole proprietorship, or other entity that is licensed pursuant to this [Chapter/Title] and operating in [STATE] that uses a Digital Network to connect Transportation Network Company Riders to Transportation Network Company Drivers who provide Prearranged Rides.”

A TNC driver uses a personal vehicle that is not a taxicab, limousine, or other hire vehicle to offer or provide a prearranged ride to TNC riders, which does not include transportation through use of a taxicab, limousine, or other hire vehicle (NCOIL 2015).

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