Legal Considerations in Relationships Between Transit Agencies and Ridesourcing Service Providers (2018)

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18 2. State and Local Requirements Types of Taxi Regulatory Systems.—Generally speaking, there are four types of regulatory systems: permits (medallions), certificate, franchise, and open entry. Except for open entry, each system places a limit on the number of cabs that may be operated under the governing authority, for example, a cap on medallions that may be issued or a limit on the number of vehicles that may operate under each certificate or franchise.112 Public Safety Requirements.113—These typically include driver safety requirements, such as back- ground checks (including fingerprint-based criminal background checks and driving record checks), drug testing, and training. For example, New York City requires a defensive driving course, medical exam, yearly drug test, and chauffeur’s license; San Fran- cisco requires a fingerprint and background check, drug test, and 10-year printout of driving record;114 and California requires “every city or county in which a taxicab company is substantially located” to adopt public health and safety regulations covering service provided in taxicabs designed to carry not more than eight persons, including a mandatory controlled substance and alcohol testing certifica- tion program meeting statutory requirements.115 Vehicle safety requirements are typically more rigorous than those for personal vehicles, in terms of the details of inspection checklist and/or the frequency of required inspections, and because of the imposition of age and mileage limits on when vehicles must be taken out of service and at what point they cannot enter service. Some jurisdictions also require vehicles to have cameras and partitions between the driver and passengers. Fare Regulation.—Virtually all jurisdictions regulate taxi fares, which generally are based on an initial charge, plus mileage and time. Some flat fares may exist for travel to airports and within central city districts. Accessibility.—Some jurisdictions have accessi- bility requirements, for example, requiring a certain number or percentage of WAVs in larger taxi fleets.116 Other jurisdictions at least encourage taxicab companies to include accessible vehicles in their fleets or provide incentives to individual drivers, paid for by adding a surcharge to regular taxi fares and/or by imposing a fee on (larger) taxi owners who do not operate WAVs.117 However, in the perhaps more frequent case where taxi regulations often do not require companies to have accessible vehicles, e.g., the Regional Transportation District (Denver), taxis do not provide any more vehicle accessibility than do TNCs. At least in the case of Denver, however, taxis appear to have been open to WAV requirements for taxis in order to compete with TNCs there.118 Geographic Requirements.—Taxis are almost always required to provide service to any would-be passenger requesting a ride. This requirement, however, is often honored in the breach.119 III. FEDERAL LEGAL ISSUES AFFECTING RELATIONSHIPS WITH RSPS Currently there is no direct federal responsibility for regulation of RSPs. Direct regulation of RSPs takes place at the state and local level. RSPs are only subject to federal jurisdiction to the extent that they are subject to more generally applicable federal laws and regulations, such as the ADA—jurisdiction that Uber and other TNCs have disputed—and federal employment statutes. However, transit agen- cies must consider to what extent FTA funding may be used to support RSP services and to what extent FTA requirements apply to any contracts with RSPs, whether or not such contracts are FTA-funded. In 2016, the Association for Commuter Transpor- tation (ACT) released a white paper calling for a 112 between PublIC and PrIVate mobIlIty, supra note 10, Appendix B, at 18. 113 Id. at 14–15. 114 Licensing Requirements Checklist, NYC Taxi & Limousine Commission, http://www.nyc.gov/html/tlc/html/ industry/licensing_checklist.shtml#legal-documents; Become a Taxi Driver, SFMTA, https://www.sfmta.com/ services/taxi-industry/become-taxi-driver. 115 Cal. GoV’t Code § 53075.5, https://leginfo.legislature. ca.gov/faces/codes_displayText.xhtml?lawCode=GOV& division=2.&title=5.&part=1.&chapter=1.&article=4. 116 E.g., Arlington County, Virginia, requires 4% accessi- bility for taxi fleets of 25 or more vehicles, ellIS, supra note 16, at 53. See also, Columbia Taxicab Commission Disabil- ity Advisory Committee, Feb. 20, 2014, https://dctaxi.dc.gov/ sites/default/files/dc/sites/dc%20taxi/page_content/ attachments/DC%20Taxicab%20Comission%20 D i s a b i l i t y % 2 0 A d v i s o r y % 2 0 C o m m i t t e e % 2 0 Comprehensive%20Report%20022014%20FINAL%20 w%20Addendum.pdf, citing, inter alia, efforts in other juris- dictions and requirements under DC Taxicab Service Improvement Amendment Act of 2012 (requiring percent- age increases in wheelchair accessibility of taxis for any sedan/taxi company with more than 20 taxis in its fleet), D.C. Code § 50–301.25, Accessible taxicabs (2012), https:// beta.code.dccouncil.us/dc/council/code/sections/50-301. 25.html. 117 See between PublIC and PrIVate mobIlIty, supra note 10, at 46–47. 118 See ellIS, supra note 16, at 44–45. 119 between PublIC and PrIVate mobIlIty, supra note 10, Appendix B, at 19.

19 new FTA MOD regulatory framework that would take into account differences in MOD service struc- ture from typical capital projects and that would incorporate MOD service into National Transit Database (NTD) data reports.120 However, as of November 2017, FTA had not updated any of its regulations or circulars to address TNC questions. Rather, FTA’s guidance was limited to the Secretary of Transportation’s December 2016 “Dear Colleague Letter” regarding ADA and Title VI issues, and answers to Shared Mobility Frequently Asked Ques- tions (Shared Mobility FAQs).121 It is anticipated that FTA may issue regulations that directly address RSPs after the agency is able to analyze the results of the MOD Sandbox and similar projects. However, until such regulations (or superseding guidance documents) issue the Dear Colleague Letter and Shared Mobility FAQs provide perhaps the best indication of how the agency will administer federal requirements for transit agency–TNC relationships. Unless otherwise noted further in this digest, the Shared Mobility FAQs are the source for the infor- mation provided about the applicability of federal requirements to RSPs. Part II discusses the eligibility of RSPs for federal funding and the federal law/regulatory require- ments—ADA, Title VI, drug and alcohol testing, labor law, and the NTD—that are most likely to significantly affect transit agency relationships with RSPs, including the threshold for applying those requirements to such relationships. The discussion in Part II assumes some familiarity with the under- lying federal requirements; rather than explaining these requirements in depth, the discussion focuses on their relevance and application to various possi- ble RSP relationships. Part II also includes analysis of ADA cases that touch on issues that may affect transit agency liability arising out of relationships with RSPs, most notably whether the relationship in question constitutes a service, program, or activity of the transit agency.122 Finally, Part II addresses federal law on employment classification. For all of those topics, cases directly involving RSPs are discussed separately infra Part V, RSP Cases and Regulatory Proceedings. A. Eligibility for Federal Financial Assistance Two interrelated questions arise concerning RSPs and eligibility for federal financial assistance. The first is whether RSP services or related activi- ties are eligible for federal funding, for example, whether the transit agency may use FTA funds to provide a discount for RSP-provided FMLM service. The second is whether RSP compliance (or noncom- pliance) with various federal requirements may affect the transit agency’s obligations under its Master Agreement with FTA. 1. RSP Service Eligibility for FTA Funding FTA has addressed the eligibility of shared mobil- ity services for FTA funding under the Shared Mobility FAQs. FTA had previously declared taxi companies that provide shared ride service to the public, or segments thereof, to be operators of public transportation, and therefore potentially eligible sub-recipients of 49 U.S.C. § 5310 grant funding for accessible taxis.123 FTA has applied the rationale for determining whether a taxi provides shared ride service to determining whether TNCs provide shared ride service. At least some TNC services may be eligible expenses under FTA grants. The structure of contracts with TNCs will determine eligibility under various grant programs. FTA funds may be used to support TNC contracts to the extent that (1) the services provided meet the definition of public trans- portation124 or (2) the services are permitted as an 120 Association for Commuter Transportation: The Case for An FTA Mobility on Demand Regulatory Framework, July 13, 2016, http://actweb.org/wp-content/uploads/2016/07/ The-Case-for-New-Mobility-on-Demand-Funding- Models_ACT-7-16.pdf. 121 Shared Mobility Frequently Asked Questions [here- inafter Shared Mobility FAQs], updated Dec. 12, 2016, https://www.transit.dot.gov/regulations-and-guidance/ shared-mobility-frequently-asked-questions; DOT Dear Colleague Letter (Equity, Access for Shared Mobility Initiatives), Dec. 5, 2016 [hereinafter 2016 Dear Colleague Letter], https://www.transit.dot.gov/regulations-and- guidance/policy-letters/dot-dear-colleague-letter-equity- access-shared-mobility. 122 As the Second Circuit has stated: To establish a violation under Section 504 or Title II, a plaintiff must demonstrate that “(1) he is a quali- fied individual with a disability; (2) the defendant is subject to one of the Acts; and (3) he was denied the opportunity to participate in or benefit from the defen- dant’s services, programs, or activities, or was other- wise discriminated against by the defendant because of his disability.” Disabled in Action v. Bd. of Elections in City of New York, 752 F.3d 189, 196–97 (2d Cir. 2014), citing McElwee v. Cnty. of Orange, 700 F.3d 635, 640 (2d Cir. 2012). 123 FTA, Section 5310 – Enhanced Mobility for Seniors and Individuals with Disabilities Formula Questions, Q. 6, https://www.transit.dot.gov/funding/grants/grant- programs/section-5310-%E2%80%93-enhanced-mobil- ity-seniors-and-individuals-disabilities. 124 Public transportation is defined under the FTA Act as “regular, continuing shared-ride surface transportation services that are open to the general public or a segment of the general public defined by age, disability or low- income.” 49 U.S.C. § 5302(14).

20 alternative to public transportation under one of FTA’s grant programs. For example, construction of waiting areas at a transit facility or providing infor- mation technology systems to support the use of shared mobility services may be eligible capital proj- ects. In the case of services eligible for funding for operating expenses, such as under 49 U.S.C. § 5307 (Urban Area Formula Grants) or 49 U.S.C. § 5311 (Rural Area Formula Grants), FTA may reimburse for the cost of contracting with a TNC to provide eligible shared ride service to the general public. Such services may be used to provide off-peak services or FMLM transportation. Note that if either local regulations or company policy allow either the driver or the first passenger to refuse additional passengers where there is capacity, the service is not shared ride. Alternatives to public transportation, such as § 5310 service or 49 U.S.C. § 5316 job access and reverse commute (JARC) service may include exclusive-ride as well as shared ride service. Microtransit services, if offering shared rides open to the general public, generally would be eligi- ble for FTA funding, although as in the case of TNCs, the private firms generally cannot be direct recipi- ents or subrecipients of FTA funding. Microtransit that does not meet the definition of public transpor- tation still may be eligible as ADA paratransit, JARC, or an alternative to public transportation under the § 5310 program. Design and construction of an eligible capital project may include integration of transit services with microtransit or TNCs. Finally, FTA notes that mobility management is eligible as a capital expense (except under 49 U.S.C.§ 5309 (Fixed Guideway Capital Invest- ment Grants))125 and can coordinate new mobility services with public transportation and other alter- native transportation services. FTA’s program guidance for the urbanized area formula program expands beyond the statutory definition in explain- ing the types of mobility management activities that are eligible under § 5307, including the provi- sion of coordination services, the development and operation of one-stop transportation traveler call centers to coordinate transportation information on all travel modes, and operational planning for acquisition of technologies to support smart customer payment systems.126 This would arguably cover the development of integrated trip planning and payment apps, as well as creating call centers to provide service to customers who do not have access to smartphones. 2. Effect of RSP Compliance on Transit Agency’s Master Agreement Obligations FTA’s Master Agreement provides that the recipi- ent of FTA funds “must take measures to assure that other participants in its Underlying Agreements (e.g., Third Party Participants) comply with applicable federal laws, regulations, and requirements, and follow applicable federal guidance, except as FTA determines otherwise in writing.”127 The Master Agreement defines Third Party Participant as follows: [E]ach participant in the Recipient’s Project, except for FTA and the Recipient, whose work under the Project is supported with FTA funding, eligible non-federal share dedicated to the Project, or is dedicated as an in-kind contribution eligible for non-federal share. A Third Party Participant may be a Subrecipient, Third Party Contractor, Third Party Subcon- tractor, Lessee, or Similar Participant in the Recipient’s Proj- ect (for example, a partner in a joint development venture).128 Thus, if FTA funds are used to support the grant in which the RSP activities are included, the RSP will be considered a Third Party Participant. However, if only local funds are involved in the project, the RSP is not a Third Party Participant under the Master Agree- ment. Under Section 3.h of the Master Agreement, the Recipient is ultimately responsible for full compliance with all federal requirements; under Section 3.i the Recipient must ensure its Third Party Participants will comply with all applicable federal requirements. Potentially relevant requirements under the Master Agreement include Record Retention (Section 9), Nondiscrimination in Federal Public Transportation Programs (Section 12.b), Nondiscrimination—Title VI of the Civil Rights Act (Section12.c), Equal Employ- ment Opportunity (Section 12.d), Transit Asset Management, (Section 20), Employee Protections (Section 24.b, c, d,), Substance Abuse (Section 35.b). As discussed further in this digest, even RSP services not funded by FTA or other federal sources may either be subject to federal requirements or—to the extent that FTA requirements apply to the grantee whether or not there are federal funds in a project—may affect the transit agency’s obligations under its FTA Master Agreement. 125 Section 5302(3)(K) defines mobility management as a capital project: “(i) consisting of short-range planning and management activities and projects for improving coordination among public transportation and other transportation service providers carried out by a recipient or subrecipient through an agreement entered into with a person, including a governmental entity, under this chap- ter (other than section 5309); but (ii) excluding operating public transportation services.” 126 FTA C 9030.1E, IV.2.g, Eligible Projects and Require- ments: Capital Projects: Mobility management, p. IV–6, Jan. 16, 2014. 127 FTA MA(23), § 1, October 1, 2016, https://www. transit.dot.gov/funding/grantee-resources/sample-fta- agreements/fta-master-agreement-fiscal-year-2017. 128 Id. at § 2.a (38) (emphasis added).

21 B. Americans with Disabilities Act In the context of analyzing potential ADA issues in transit agency relationships with RSPs, it is useful to consider not only Title II, but also Title III, which prohibits discrimination on the basis of disability by owners, operators, lessees, and lessors of places of public accommodation129 and in the full and equal enjoyment of specified public transportation services provided by a private entity that is primarily engaged in the business of transporting people and whose operations affect commerce.130 Title III requirements are relevant because even in cases where Title II may not come into play, either Title III actions seeking to enjoin TNC service131 or DOJ enforcement activity could disrupt TNC service and thereby adversely affect the transit agency relying on the service. While Uber and Lyft both have nondiscrimination policies and reserve the right to fire drivers who violate those policies, they also disclaim any other responsibility for drivers who in fact violate ADA requirements.132 Both TNCs have taken the position that unlike taxicabs companies—whose ADA obliga- tions are directly addressed by the ADA regulations and have been judicially established—they are “tech- nology companies” rather than “transportation companies” and as such are not subject to Title III of the ADA. Although the federal courts have not yet resolved this status issue133 in the context of ADA liti- gation, several courts have rejected the “technology company” argument in the context of employment litigation. TNCs have also argued that they are not a public accommodation nor do they operate a place of public accommodation, and therefore on that basis alone are not subject to Title III.134 DOJ, however, has argued that a finding of public accommodation is not necessary to establishing a Title III violation, as the prohibition against discrimination by private trans- portation companies gives rise to a separate viola- tion. Notably DOJ discussed the applicability of the statute and implementing regulation to “taxi and other demand responsive transportation services” in advancing that argument.135 In addition, the TNC mobile platforms should be subject to ADA require- ments for accessibility to the visually impaired.136 There appears to be a relationship between the TNCs’ position on the applicability of the ADA to their service and their position on employee classification. In at least some jurisdictions, by exercising control to ensure that drivers properly accommodate disabled patrons, TNCs could arguably be proving that they exercise enough control to be considered employers.137 Regardless of the eventual judicial disposition of the question of TNC liability under Title III, transit agencies, of course, must comply with Title II,138 and that obligation includes ensuring that any service they contract out also complies with Title II. However, as discussed further in this digest, the specific ADA requirements that apply depend on the type of service being offered. This section describes differences in the applica- bility of Title II requirements depending on the types of service provided by RSPs under contract with transit agencies, notably demand responsive service and paratransit (the prevalent forms of relationship as of 2017), as well as fixed-route service (with or without established stops). In addition, in the case of transit agency relationships with TNCs, a question that will arise in assessing ADA liability is whether the relationship in question constitutes a service, program, or activity of the transit agency. It appears likely that merely linking to the TNC in an app would not constitute providing service on behalf of the transit agency. If, however, the transit agency were to subsidize trips, then arguably the TNC would be providing service on behalf of the agency regard- less of the number of providers being subsidized. Several cases have addressed TNC liability under the ADA. However as of November 2017, none had 135 Statement of Interest of the United States of Amer- ica, National Federation of the Blind of California v. Uber Technologies, Inc., No. 3:14-cv-04086-NC (N.D. Cal. Feb. 5, 2015), https://www.ada.gov/briefs/uber_soi.pdf. 136 See Samantha Bomkamp, McDonald’s, Kmart, others settle suits over website access for the blind, ChI. trIb., Nov. 6, 2017, http://www.chicagotribune.com/business/ct-biz- blind-website-settlements-20171107-story.html (accessed Nov. 9, 2017). One of the companies that settled was Grub- hub, a food delivery service. 137 Casey (Dilemma), supra note 44, 1 at 57–158. 138 As public entities, transit agencies are subject to all of Title II, not merely the transportation-specific Part B. Burkhart v. Washington Metropolitan Area Transit Auth., 112 F.3d 1207, 1210 (D.C. Cir. 1997). 129 42 U.S.C. § 12182(a). 130 42 U.S.C. § 12184(a); 49 C.F.R. § 37.5(a), (f). 131 Civil actions under Title III brought by private plaintiffs can only obtain injunctive, not compensatory and punitive, relief. Powell v. Nat’l Bd. of Medical Examin- ers, 364 F.3d. 79, 86 (2d Cir. 2004), as corrected, 511 F.3d. 238 (2nd Cir. 2004). [Correction not material.] 132 Casey (Dilemma), supra note 44, at 149–55. 133 Rachael Reed, Note & Comment: Disability Rights in the Age of Uber: Applying the Americans with Disabilities Act of 1990 to Transportation Network Companies, 33 GA. ST. U.L. REV. 517 (2017). 134 National Federation of the Blind of California v. Uber Technologies, Inc., 103 F. Supp. 3d 1073 (N.D. Cal. 2015). The public accommodation argument was actually Uber’s first line of defense in this case, moving for a motion to dismiss solely on the public accommodation claim. In denying that motion, the district court held that the plaintiffs had demon- strated a plausible claim for ADA liability under § 12182. Id. at 1083–84. The case was settled before the issue of whether Uber was a transportation company was addressed.

22 done so in the context of TNCs providing service in conjunction with a transit agency relationship. 1. In General DOJ and FTA share enforcement responsibility for the public transportation requirements of the ADA and Section 504 of the Rehabilitation Act of 1973. Under the 2005 Memorandum of Understand- ing between DOJ and FTA, FTA works cooperatively with recipients of FTA financial assistance to ensure compliance with ADA requirements and forwards to DOJ “for appropriate handling complaints concerning public or private entities that provide public transportation but are not recipients of Federal financial assistance.”139 The ADA’s prohibi- tion against discrimination based on disability is also enforceable by private right of action.140 The DOT ADA regulations most relevant to RSP service provision are contained in 49 C.F.R. Part 37, notably § 37.5, Nondiscrimination; Paratransit as a Complement to Fixed Route Service (Subpart F); Provision of Service (Subpart G); and 49 C.F.R. § 37.173, Training requirements. FTA has issued guidance—most recently updated in 2015—for compliance with DOT ADA regulations.141 FTA addressed several points concerning general ADA applicability in the Shared Mobility FAQs that focused on ADA requirements: The ADA applies to all transportation, whether or not federal funding is involved (a point also raised in the December 2016 Dear Colleague Letter), and whether the transpor- tation is provided by public or private entities. This is the case even if the private entities are not primarily engaged in the provision of transpor- tation, for example, a hotel providing a shuttle service, although such private entities are subject to different requirements for compliance. FTA notes that the specific ADA requirements that will apply to a specific arrangement may vary depending on whether the service is fixed-route, general public demand responsive, or complementary ADA para- transit. Those differences are discussed in subsec- tions 2 through 4. The December 2016 Dear Colleague Letter states: “When your agency enters into a covered partnership with a TNC, however, you must ensure that your service is accessible to and usable by persons along the full spectrum of disabilities, including both physi- cal and intellectual disabilities.” Although the FTA does not appear to have addressed the question of what constitutes a “covered partnership” for purposes of complying with FTA requirements, once a transit agency subsidizes TNC service—assuming the TNC does not provide Part 38-compliant vehicles—the transit agency should also either contract with another provider with such vehicles to provide equiv- alent service or provide such service using transit agency vehicles. In other words, FTA’s policy of allow- ing a transit agency to provide demand responsive service with vehicles that do not comply with 49 C.F.R. Part 38 as long as the service meets the equivalent service standard applies to TNC service. In the event the TNC provides service as part of a project involving another provider furnishing WAVs, the TNC would still be responsible for compliance with the generally applicable ADA requirements. 2. Fixed Route DOT ADA regulations require that vehicles on fixed-route service be accessible to and usable by persons with disabilities, including wheelchair users, and that complementary paratransit be provided for individuals with disabilities who are unable to use fixed-route service. (See infra subsec- tion 4.) However, an individual with a disability may not be required to use complementary paratransit rather than the fixed-route service.142 Private enti- ties that provide fixed-route or demand responsive service under contract with a transit agency “stand in the shoes” of the transit agency and must comply with the same Part 37 requirements the transit agency would have to follow if the transit agency were providing the service itself.143 142 49 C.F.R. § 37.5(b); FTA C 4710.1, at 2-2. In fact, providing transportation via mainstream fixed route ser- vice to the extent feasible is one of the primary goals of the ADA. See ruSSell thatCher, CarolIne FerrIS, StrateGy GuIde to enable and Promote the uSe oF FIxed-route tranSIt by PeoPle wIth dISabIlItIeS, Transit Cooperative Research Program, TCRP Report 163, Transportation Research Board of the National Academies of Science, Engineering and Medicine, Washington, D.C., 2013. 143 49 C.F.R. § 37.23; FTA C 4710.1, at 1–5 to 1–6. 139 Memorandum of Understanding Between the Civil Rights Division of the U.S. Department of Justice & the Fed- eral Transit Administration of the U.S. Department of Trans- portation Concerning Implementation and Enforcement of the Public Transportation Provisions of the Americans with Disabilities Act and Section 504 of the Rehabilitation Act of 1973, July 2005, https://www.transit.dot.gov/regulations- and-guidance/civil-rights-ada/memorandum-understanding- us-department-justice. 140 Barnes v. Gorman, 536 U.S. 181, 122 S. Ct. 2097, 153 L. Ed. 2d 230 (2002) (holding that Congress intended to create a private right of action to enforce 42 U.S.C. § 12132). 141 Americans with Disabilities Act (ADA): Guidance, FTA C 4710.1, Nov. 4, 2015, https://www.transit.dot.gov/ sites/fta.dot.gov/files/docs/Final_FTA_ADA_Circular_ C_4710.1.pdf. Technically, recipients are required to com- ply with Section 504 of the Rehabilitation Act of 1973 as a condition of grant assistance, and in turn required to comply with DOT ADA regulations in order to comply with § 504. FTA C 4710.1, at 1–2. For simplicity’s sake, the discussion throughout Section B refers to the obligation to comply with the ADA regulations themselves.

23 Although most transit agency–RSP partnerships to date have involved demand responsive service, FTA has addressed the possibility of using an RSP to provide fixed-route service. FTA has advised that even should such an arrangement not be funded with federal assistance, the transit operator would be required to ensure that all vehicles used on the fixed route were accessible to and usable by individuals with disabilities, including wheelchair users, and that complementary paratransit was provided.144 Clearly, the same requirements would apply to RSP-provided fixed-route service funded through an FTA grant. In either case, the RSP would be subject to the require- ments under § 37.173, that personnel be “trained to proficiency,” which FTA has interpreted to mean “that, once trained, personnel can consistently and reliably operate accessibility features, provide appropriate assistance to individuals with disabilities, and treat riders in a respectful and courteous way.”145 If an RSP acquires a fleet of vans to provide fixed- route service under contract, those vans must be accessible, as they would have to be if the transit agency itself acquired them.146 However, where an automobile manufacturer implemented a fixed- route transportation system using vans that the manufacturer supplied, FTA advised that the acces- sibility requirement would depend on the size of the van, citing 49 C.F.R. § 37.101. FTA apparently viewed the manufacturer as a private entity not primarily engaged in the business of transporting people, and not under contract to an FTA-funded public transit agency. Uber has effectively argued in the past that it should come under this category, a stance that has been rejected by FTA, DOJ, and several courts. FTA noted that in the case of the automobile manufacturer’s fleet, the use of an app to hail the fixed-route vehicles did not transform other- wise fixed-route service into demand responsive service. By implication, the lack of established stops along a fixed route should not transform otherwise fixed-route service into demand responsive service. 3. Demand Responsive Service to the General Public The ADA regulations define demand responsive transportation systems broadly as any system that is not fixed-route.147 Demand responsive systems include dial-a-ride service, taxi subsidy service, vanpool service, and route deviation service, as well as complementary paratransit service148 (discussed in subsection 4). All of the general ADA require- ments, as discussed in subsection 1, apply to demand responsive service. Additional requirements rele- vant to RSP relationships apply specifically to demand responsive service. Noting that specific ADA requirements vary based on the type of service required and that most TNC partnerships involve demand responsive service, the December 2016 Dear Colleague Letter raised two points: First, under DOT ADA Regulations (49 C.F.R. section 37.77), public entities operating a demand-responsive service must either acquire accessible vehicles or otherwise ensure that such services provide equivalent service to persons with disabilities, including those who use wheelchairs and/or have intellectual disabilities. . . . Second, service is considered equiv- alent when persons with disabilities, including wheelchair users, are provided with the same level of service according to [seven specified] criteria (see 49 C.F.R. section 37.77(c)).149 The letter explains that a transit agency can meet the WAV requirement by requiring the TNC to provide WAVs under the contract, contracting as well with another entity capable of providing the necessary WAVs, or using WAVs already in the para- transit fleet. The Shared Mobility FAQs provided more detail concerning equivalent service requirements than did the December 2016 Dear Colleague Letter. For example, a passenger requiring a WAV could not be charged more than a passenger not requiring such vehicle for a similar trip150 and should not have to wait longer for service. The public entity is generally responsible for ensuring equivalent service. There- fore, if the service requires a separate WAV provider, and that WAV provider charges more than the RSP for demand responsive service, then the transit agency must pick up the difference, rather than allowing the additional costs to be borne by the passenger requiring the WAV.151 144 Shared Mobility FAQs: Americans with Disabilities Act (ADA), https://www.transit.dot.gov/regulations-and- guidance/shared-mobility-faqs-americans-disabilities- act-ada. 145 FTA C 4710.1, at 2–20. 146 49 C.F.R. § 37.23(b); Shared Mobility FAQs: Americans with Disabilities Act (ADA), https://www.transit.dot.gov/ regulations-and-guidance/shared-mobility-faqs-americans- disabilities-act-ada. 147 49 C.F.R. § 37.3. 148 See generally FTA C 4710.1, Chapter 7—Demand Responsive Service. 149 See 2016 Dear Colleague Letter, supra note 121, jump to “If a transit system partners with a ride-sourcing entity to provide first-mile/last-mile service, what ADA regula- tions apply?” The seven criteria are: 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 reservations capability; and 7) Any constraints on capacity or service availability. 150 49 C.F.R. § 37.5(b); FTA C 4710.1, at 2–3. 151 Shared Mobility FAQs: Americans with Disabilities Act (ADA), https://www.transit.dot.gov/regulations-and- guidance/shared-mobility-faqs-americans-disabilities- act-ada.

24 FTA has stated that RSP-provided FMLM service “would most likely be regarded as demand responsive service to the general public.” The RSP vehicles would not necessarily have to be WAVs, so long as the service as a whole were accessible to and usable by individuals with disabilities, including individuals who use wheelchairs. The required accessibility could be afforded by having some WAVs be provided, if not by the RSP, then by the transit agency or another contractor, so that the service provided to passengers with disabilities would be equivalent to the service provided to passengers without disabilities.152 However, FTA also advised that if an RSP planned to acquire a fleet of vans to provide demand responsive service, “the vans must be accessible to wheelchair users unless the system, when viewed in its entirety, meets the standard for equivalent service.”153 4. Complementary Paratransit Service The ADA establishes a requirement to provide complementary paratransit service comparable to the level of fixed-route service provided, including comparable—to the extent practicable—response time.154 That provision specifically defines discrimi- nation for purposes of 42 U.S.C. § 12143 as a failure of a public entity to which § 12143 regulations apply to submit, or commence implementation of, a plan in accordance with public participation and applicable regulatory requirements; fail to submit a modified plan as required; submit to the Secretary of a noncompliant modified plan; or fail to provide para- transit or other special transportation services in accordance with the submitted plan/modified plan.155 The Second Circuit has held that § 12143 is enforce- able by a private right of action.156 Complementary paratransit service (ADA para- transit) has been the subject of extensive FTA guidance157 and numerous studies that detail the intricacies of ADA paratransit requirements and practice.158 However, as is the case of other forms of service under FTA’s jurisdiction, as of November 2017, FTA’s guidance on TNCs and paratransit appears to be limited to the December 2016 Dear Colleague Letter and the ADA Shared Mobility FAQs. While recognizing the potential benefits of using TNCs to deliver paratransit service, the December 2016 Dear Colleague Letter emphasized that transit agencies must provide paratransit service improve- ments so as to benefit all paratransit riders: “It would not be appropriate, for example, to offer real-time service to ambulatory paratransit riders, while leaving wheelchair users with next-day service.” The letter also stressed the importance of TNC drivers being trained on ADA requirements in general, such as accommoda- tion of service animals, and that paratransit drivers be trained on paratransit service criteria. The ADA Shared Mobility FAQs state that transit agencies may use RSPs to provide ADA paratransit, but that the requirement for origin-to-destination service and all seven ADA paratransit service 152 Shared Mobility FAQs: Americans with Disabilities Act (ADA)—If a transit system partners with a ride-sourcing entity to provide first-mile/last-mile service, what ADA regulations apply?, https://www.transit.dot.gov/regulations- and-guidance/shared-mobility-faqs-americans-disabilities- act-ada. 153 Shared Mobility FAQs: Americans with Disabilities Act (ADA), https://www.transit.dot.gov/regulations-and- guidance/shared-mobility-faqs-americans-disabilities- act-ada. 154 42 U.S.C. § 12143. 155 42 U.S.C. § 12143(e). 156 Abrahams v. MTA Long Island Bus, 644 F.3d 110, 118 (2d Cir. 2011). 157 FTA C 4710.1, ch. 8, Complementary Paratransit Service, ch. 9, ADA Paratransit Eligibility; Federal Transit Administration, “Origin-to-Destination Service” (updated Mar. 16, 2016), https://www.transit.dot.gov/regulations- and-guidance/civil-rights-ada/origin-destination-service (accessed Feb. 9, 2017); ADA FAQs (updated Mar. 16, 2016), https://www.transit.dot.gov/regulations-and- guidance/civil-rights-ada/frequently-asked-questions (accessed Aug. 11, 2017); FTA Report No. 0081: Accessible Transit Services for All (Dec. 2014), https://www.transit. dot.gov/sites/fta.dot.gov/files/FTA0081_Research_Report_ Summary.pdf; Topic Guides on ADA Transportation, A Series of Topic Guides Providing Technical Assistance for Transit Agencies, Riders and Advocates on the Americans with Disabilities Act (ADA) and Transportation (June 2010), https://dredf.org/ADAtg/; ADA Paratransit Hand- book: Implementing the Complementary Paratransit Ser- vice Requirements of the Americans with Disabilities Act of 1990, Prepared for the UMTA Task Force on the Ameri- cans with Disabilities Act (Sept. 1991). 158 ellIS, supra note 16; Sarah m. kauFman, aShley SmIth, Jenny o’Connell & daVId marullI, IntellIGent ParatranSIt, nyu/waGner rudIn Center For tranSPortatIon PolICy & manaGement, urban deSIGn Forum (November 2016), https://wagner.nyu.edu/impact/research/publications/ intelligent-paratransit; marIlyn Golden, tranSPortatIon uPdate: where we’Ve Gone and what we’Ve learned, National Council on Disability, May 4, 2015, accessible from https://ncd.gov/publications/2015/05042015; GAO-13-17, supra note 78; nelSon/nyGaard ConSultInG aSSoCIateS, toolkIt For InteGratInG non-dedICated VehICleS In Para- tranSIt SerVICe (Transit Cooperative Research Program, TCRP Report 121, Transportation Research Board of the National Academies of Science, Engineering and Medicine, Washington, D.C., 2007, p. 7.

25 criteria apply.159 The regulations also allow transit agencies to offer service that exceed the required service criteria, referred to by FTA as premium service. Transit agencies may charge higher fares for premium services, and they may limit premium service trip purposes.160 However, the regulations do not permit a transit agency to offer different classes of ADA paratransit based on the need for WAVs. Therefore, if a transit agency offers real-time para- transit to ambulatory riders, it must also offer such real-time service to wheelchair users.161 5. ADA Cases The cases discussed in this section touch on issues relevant to legal risk assessment for possible RSP relationships, including cases that turn on whether allegedly discriminatory conduct is covered by Title II and/or that involve paratransit providers alleged to have not complied with ADA. TNC-specific cases are discussed infra Part V, RSP Cases and Regula- tory Proceedings. Anderson v. Rochester-Genesee Regional Transp. Auth.162—This Second Circuit case was the first—and apparently only—circuit court decision to examine the response time requirement under C.F.R. § 37.131(b) and the capacity constraints requirement under § 37.131(f). The court first described the statutory framework of the ADA. The court then discussed the tension between the response time requirement under § 37.131(b)—which the court described as concerning “the system a paratransit service provider must design and implement”—and capacity constraints requirement under § 37.131(f)—which the court described as gauging “whether a provider has fulfilled its obligation to meet demand.”163 Despite an overall 94% rate of scheduling requested paratransit trips, the court found that the provider’s success rate for near-term requests was unaccept- able.164 The court held that the provider violated § 37.131(f) by “maintaining a pattern or practice that significantly limits the availability of paratransit service for eligible riders.”165 Melton v. Dallas Area Rapid Transit (DART).166— In Melton, the Fifth Circuit addressed the question of whether Title II of the ADA and § 504 of the Rehabili- tation Act require reasonable modification of para- transit service. In Melton, the plaintiff alleged that DART’s refusal to move the pick-up spot for the plain- tiff’s paratransit service violated Title II and § 504. However, the pick-up spot was consistent with DART’s paratransit plan approved as ADA compliant by FTA. In ruling that reasonable modification was not required, the court stated that the regulatory scheme requires transit agencies to submit a para- transit plan to the FTA for approval; once that plan is approved, providing paratransit service in contraven- tion to the plan constitutes prohibited discrimination under Title II. This is so because the FTA-approved plan is itself the reasonable accommodation. Further- more, the court found that operation of paratransit service is not subject to DOJ’s part 35 regulations. Finally, the court held that § 504 does not provide an independent basis for requiring reasonable modifica- tions to paratransit service.167 In 2015, DOT issued a 159 49 C.F.R. § 37.3 requires ADA paratransit service to be origin-to-destination. Complementary paratransit required under § 37.121 must meet the service criteria set forth in § 37.131: Service area (at least ¾-mile on either side of a fixed route); Response time (next-day, with advance reservation and real-time scheduling permitted); Fares (not more than twice the regular fixed route fare for a compa- rable trip); No restrictions on trip purpose; Hours and days of service (at least the same as fixed route); No capacity constraints. See FTA C 4710.1, at 8-2 to 8-5; 8-6 to 8-27. 160 49 C.F.R. § 37.131(g); FTA C 4710.1, at 8-28 to 8-29. 161 Shared Mobility FAQs: Americans with Disabilities Act (ADA), https://www.transit.dot.gov/regulations-and- guidance/shared-mobility-faqs-americans-disabilities- act-ada. 162 337 F.3d 201 (2d Cir. 2003). Subsequent lower court cases included Anderson v. Rochester-Genesee Regional Transp., 388 F. Supp. 2d 159 (W.D. N.Y. 2005) (attorney’s fees in ADA case); Anderson v. Rochester-Genesee Regional Transp., 332 F. Supp. 2d 540 (W.D. N.Y., 2004) (modifying 2002 decision and order). 163 Anderson, 337 F.3d at 209. 164 The Court noted: We conclude that Lift Line denied a “substantial” number of paratransit rides in violation of § 37.131(f) (3)(i)(B). While Lift Line scheduled over 94% of all requests received during the sample period, the success rate declined sharply with the number of days of advance notice: Lift Line denied 37 of the 130 rides requested four days in advance, 38 of the 105 rides requested three days in advance, 67 of the 180 rides requested two days in advance, and 92 of the 161 rides requested for the next day. Overall, Lift Line denied 436 of the 8,839 rides requested in the twenty-day period tracked by the plaintiffs before they commenced this action. These statistics are unrefuted and comport with the trip denial data included in the defendants’ DOT submissions over the last several years. Id. at 214–15. The Court cited to a letter from the Department of Justice that stated in part: “[A]n excus- able cause [of operational problems] must truly be beyond the control of the transit provider.... Indeed, once a seemingly unforeseeable pattern develops,... the recurring event becomes foreseeable, and the transit authority can no longer claim the matter is beyond its ability to address.” Id. at 215. 165 Id. 166 391 F.3d 669 (5th Cir. 2004). See also Boose v. Tri- County Metro. Transp. Dist. of Oregon, 587 F.3d 997 (9th Cir. 2009) (holding that neither the ADA or DOT ADA regu- lations require reasonable modifications to paratransit ser- vice that complies with FTA-approved paratransit plan). 167 Melton, 391 F.3d at 674–76.

26 regulation requiring transportation entities to make reasonable modifications/accommodations to policies, practices, and procedures to avoid discrimination and to ensure that their programs are accessible to indi- viduals with disabilities.168 Liberty Resources, Inc. v. Southeastern Pennsylvania Transportation Authority (SEPTA).169—Plaintiffs alleged that the number and nature of trip denials issued by SEPTA to disabled persons constitutes a violation of Title II of the ADA and of § 504 of the Rehabilitation Act, and sought declaratory and injunc- tive relief. In reviewing the requirements of 42 U.S.C. § 12143 and the implementing regulations, in particu- lar the service criteria related to response time and capacity constraints, the district court noted that the capacity constraints requirement created a pattern and practice violation “where the public entity issues a substantial number, as opposed to a substantial percentage, of trip denials which cannot be attributed to forces outside the control of that entity,”170 noting as well that where there are regulated or repeated actions constituting such a pattern or practice viola- tion there is likely to be a response time violation as well.171 The court rejected as beside the point SEPTA’s argument that it provided rides to ADA-eligible patrons 97.2% of the time. The court cited to statistics on the number of ADA-eligible patrons denied rides, discussed SEPTA’s lack of attempts to provide rides to all ADA-eligible patrons, and noted that SEPTA provided a higher level of rides to senior patrons than to ADA-eligible patrons. The court then concluded that SEPTA had violated both service criteria (response time and capacity constraints).172 Martin v. Metropolitan Atlanta Rapid Transit Auth. (MARTA).173—Plaintiffs alleged multiple ADA viola- tions in MARTA’s fixed-route service, including failure to properly train bus, rail, and paratransit operators, as well as numerous paratransit deficiencies.174 The district court found that plaintiffs’ showing concern- ing MARTA’s alleged failures to meet accessible information, lift maintenance, stop announcement, training, and elevator maintenance requirements, as well as failure to comply with paratransit service criteria, demonstrated sufficient likelihood of success on the merits. The FTA finding that serious deficien- cies existed in MARTA’s paratransit service was a critical element in the court’s conclusion. O’Connor v. Metro Ride, Inc.175—This opinion was issued in denying a transit agency’s motion for summary judgment in an action for damages for injury to a paratransit patron. Plaintiffs were indi- viduals with disabilities (one of whom was a wheel- chair user) who were dropped at the end of a driveway instead of being provided the door-through- door service called for under state statute and the transit authority’s paratransit plan submitted to FTA. When the plaintiffs attempted to enter the house without the driver’s assistance, an injury- causing accident ensued. The paratransit service was delivered under contract by a private company; state law prohibited federal funding from being used for the service, although federal funding did go to the transit agency that was used for purposes other than paratransit. Based on that funding distinction, the district court dismissed the plaintiffs’ § 504 claim against the private company (which could be liable under § 504 if it had received federal funding), but not the § 504 claim against the transit agency.176 The court dismissed the ADA claim against the private company, finding that although the company could be enjoined under federal regulations, the company could not be liable for money damages under Title II.177 The court also rejected the transit 173 225 F. Supp. 2d 1362 (N.D. Ga. 2002), settled in August of 2016. 174 Non-paratransit allegations included MARTA’s fail- ure to provide schedule and route information in a format accessible to blind patrons, maintain wheelchair lifts on buses, provide alternative transportation when wheelchair lifts fail, maintain proper wheelchair securement on buses, make proper stop announcements, adequately maintain elevators, and properly train its bus, rail, and paratransit operators. Id. at 1364–70. Paratransit complaints centered on failure to meet agreed-upon pick-up window or notify customer of changes in ready time. The court also cited an FTA assessment that found numerous deficiencies in MARTA’s paratransit service. Id. at 1370–71. 175 87 F. Supp. 2d 894 (D. Minn. 2000). 176 Id. at 897–98. 177 Id. at 899–900. 168 49 C.F.R. § 37.5(i), § 37.169, and Appendix E. For a discussion of DOT’s rationale for this regulation, see Transportation for Individuals With Disabilities; Reason- able Modification of Policies and Practices: Final Rule, 80 Fed. Reg. 13,253, Mar. 13, 2015, https://www.gpo.gov/fdsys/ pkg/FR-2015-03-13/pdf/2015-05646.pdf. 169 155 F. Supp. 2d 242 (E.D. Pa. 2001). 170 Id. at 255. 171 Id. at 254–55. 172 The court stated: Succinctly put, I conclude that while Septa provides rides for many ADA-eligible patrons in compliance with the law, Septa may not rely on its own inadequacies to justify its noncompliance with the ADA and the Reha- bilitation Act for all ADA-eligible patrons. . . . I conclude that the stipulated facts and uncontested evidence dem- onstrate that Septa has violated the next-day mandate and the capacity constraint provision of the regulations under the ADA and the Rehabilitation Act. Id. at 258. The state of Maryland settled a somewhat similar case. See Freeman v. Rahn, No. CCB-15-cv-00149 (D. Md. Jan. 16, 2015). The plaintiffs had alleged ADA vio- lations related to the Baltimore MTA’s paratransit certifi- cation and telephone call center processes and operations, including requirements for the reservation of paratransit trips and capacity for accepting reservations.

27 agency’s argument that the ADA only requires origin-to-destination service, finding that the stat- ute requires the transit agency to deliver service in accordance to the plan it submits to DOT, which in this case was door-through-door. Therefore, a jury could find that failure to follow the plan was discrim- ination under Title II. C. Title VI Given the potential effects on minority and disabled populations who may have access issues concerning transportation offered by TNCs and other similar providers,178 adding RSP service is likely to have Title VI implications. Because some low-income communities are comprised of a large number of minority persons, the lack of access to RSP service in low-income communities may also present Title VI issues. However, this is only the case when the affected low-income persons are also minorities. Title VI concerns may be increased where the current service will be reduced or eliminated as part of the RSP project. This section discusses the applicability to RSP service of Title VI itself, DOT’s Title VI regulation, and FTA’s guidance. The Statute.—Title VI prohibits discrimination on the basis of race, color, and national origin in any program or activity receiving federal financial assis- tance, and requires federal agencies to enforce recip- ient compliance with Title VI requirements. Persons alleging discrimination may seek enforcement of Title VI administratively with the funding agency (for disparate impact claims) or via litigation (for intentional discrimination).179 RSP services may pose Title VI noncompliance risks in three distinct areas: discrimination by drivers based on race or ethnicity,180 language accessibility to services,181 and low-income access (including disproportionate lack of access based on race due to limited access to smartphones/mobile banking). The city of Seattle, Washington, for example, discussed the effects on being unbanked on accessing shared mobility services, noting the unbanked market “is typically concentrated in areas of low-wealth or in communi- ties of color.”182 DOT Title VI Regulation.—DOT’s implementa- tion of Title VI requirements as they apply to DOT programs comes under 49 C.F.R. Part 21. The DOT regulations specifically prohibit recipients from discriminating directly or through contractual or other arrangements.183 Part 21 also mandates that DOT’s modal administrations require assurances of Title VI compliance from grantees as a condition of receipt of federal financial assistance.184 Appendices to the DOT Title VI regulations provide guidance on the application of Title VI requirements to various DOT programs. The example related to FTA specifi- cally addresses nondiscrimination with regard to “the routing, scheduling, or quality of service of transportation service furnished as a part of the project on the basis of race, color, or national origin. Frequency of service, age and quality of vehicles assigned to routes, quality of stations serving differ- ent routes, and location of routes may not be deter- mined on the basis of race, color, or national origin.”185 178 See between PublIC and PrIVate mobIlIty, supra note 10, at 131–34; Shaheen et al., supra note 2, ch. 5. 179 42 U.S.C. § 2000d through § 2000d-7. 180 Yanbo Ge, Christopher R. Knittel, Don MacKenzie & Stephen Zoepf, Racial and Gender Discrimination in Transportation Network Companies, Working Paper 22776, National Bureau of Economic Research, October 2016, https://economics.stanford.edu/events/racial-and-gender- discrimination-transportation-network-companies (accessed Mar. 9, 2017); Aarian Marshall, Uber’s Discrimi- nation Problem Is Bad News for Public Transit, wIred, Nov. 3, 2016, https://www.wired.com/2016/11/ubers- discrimination-problem-bad-news-public-transit/ (accessed Feb. 24, 2017). 181 kauFman et al., supra note 158, at 13; Jorge v. New York City Transit Auth., 14-cv-9946 (S.D.N.Y, Apr. 2016); Transit Authority to Offer Translations Under Deal, N.Y.L.J., Apr. 19, 2016, http://www.newyorklawjournal. com/id=1202755253505/Transit-Authority-to-Offer- Translations-Under-Deal?slreturn=20170714231752 (accessed Aug. 14, 2017). 182 Hester Serebrin, Improving Unbanked Access to Shared Mobility Services, Seattle Department of Transpor- tation, June 2016, available at https://www.slideshare.net/ HesterSerebrin/serebrincapstonefinal. 183. 49 C.F.R. § 21.5(b)(1). 184 49 C.F.R. § 21.7. 185 Appendix C to Part 21—Application of Part 21 to Cer- tain Federal Financial Assistance of the Department of Transportation, subsection (a)(3)(iii). The Supreme Court has ruled that conduct that disproportionately affects lim- ited English proficiency (LEP) persons constitutes national origin discrimination prohibited under Title VI. Lau v. Nichols, 414 U.S. 563, 94 S. Ct. 786, 39 L. Ed. 2d 1 (1974) (holding failure of San Francisco school system to provide English language instruction to approximately 1,800 stu- dents of Chinese ancestry who did not speak English or to provide them with other adequate instructional procedures denied them meaningful opportunity to participate in public educational program and thus violated § 601 of the Civil Rights Act of 1964). The Supreme Court has since ruled that there is no private right of action to enforce Title VI regula- tions. Alexander v. Sandoval, 532 U.S. 275 (2001). DOT has addressed LEP requirements in policy guidance. Policy Guidance Concerning Recipients’ Responsibilities to Limited English Proficient (LEP) Persons, 70 Fed. Reg. 74,087, Dec. 14, 2005, https://www.gpo.gov/fdsys/pkg/FR-2005-12-14/pdf/ 05-23972.pdf. A more thorough analysis of LEP require- ments than is appropriate in this report was addressed in a 2011 TCRP Research Results Digest. JoCelyn k. waIte, tranSIt aGenCy ComPlIanCe wIth tItle VI: lImIted enGlISh ProFICIenCy requIrementS (Transit Cooperative Research Program, Research Results Digest 97, Transportation Research Board of the National Academies of Sciences, Engi- neering and Medicine, Washington, D.C., 2011).

28 Thus, issues that may arise in RSP relationships, such as adding RSP FMLM service or substituting RSP service for existing service, would seem to fall under the DOT regulation. FTA Title VI Guidance.—FTA’s guidance regard- ing Title VI compliance includes FTA’s Title VI circu- lar186 and a set of FAQs related to Title VI. The circular is intended to provide FTA recipients with “guidance and instructions” to carry out Part 21 and to “integrate into their programs and activities considerations expressed in the Department’s [Limited English Proficiency (LEP) guidance.]”187 Recipients are responsible for ensuring that contrac- tors follow the recipient’s Title VI program. Provid- ers of demand responsive service, including ADA complementary paratransit, are responsible for following the general requirements set forth in Chapter III of the circular. Providers of fixed-route transit are responsible for following the require- ments of Chapter III and IV. Although low-income populations are not a protected population under Title VI, the circular requires that equity analyses performed for fare changes evaluate the relative effect on such populations. Certain Chapter IV requirements, such as evaluating service and fare equity changes, generally only apply to transit providers operating 50 or more fixed-route vehicles in peak service and are in an urbanized area of 200,000 or more in population. However, FTA’s Director of Civil Rights can place other fixed-route providers in that more stringent category. Not surprisingly, FTA’s Title VI circular did not anticipate the changes in service delivery brought about by RSPs. However, the definition of demand response system incorporates the concept of an advance scheduling request, noting that “advance request for service is a key characteristic of demand response service.”188 This is the case for TNCs, which require a reservation, however short term. Moreover, the 2012 circular cautions that grantee activities not specifically described therein, or not funded by FTA, still must be administered in accordance with Title VI,189 and as indicated by references in the December 2016 Dear Colleague Letter, FTA finds Title VI requirements applicable to TNC partnerships. The letter touched briefly on how Title VI require- ments may be implicated in TNC partnerships: TNC services typically rely almost exclusively on the use of a smartphone linked to a credit or debit card to arrange for service, which presents a significant barrier to lower income and limited English proficiency individuals who do not own a smartphone and/or who do not have a credit card or bank account. Given that communities of color are disproportion- ally low-income, each public transit agency has an obliga- tion under Title VI to ensure that alternative methods of both payment and reservations are available. This is the case because the grantee’s receipt of federal funds makes its TNC service subject to Title VI, even if federal funds are not used for the TNC service itself. No FTA guidance was identified that might assist transit agencies in ensuring the availability of such alternative methods. However, transit agen- cies are already grappling with Title VI issues in terms of payment media as they migrate to elec- tronic fare payment systems.190 For example, the TriMet E-Fare analysis found that several proposed policy options could have disparate impacts on minority populations or create disproportionate burdens on low-income populations, all of which could arise in RSP arrangements: • Automatic reload option for e-card using a credit/debit card (potential disparate benefit). • New fare medium to pay fares using a contactless smart credit/debit card (potential disparate benefit). • $5 minimum load requirement for e-card.191 186 FTA C 4702.1B, Title VI Requirements and Guide- lines for Federal Transit Administration Recipients, Oct. 1, 2012, at ch. II–1, accessible from https://www.transit. dot.gov/regulations-and-guidance/fta-circulars/title-vi- requirements-and-guidelines-federal-transit. 187 FTA C 4702.1B, 1, Purpose; Title VI – Frequently Asked Questions, https://www.transit.dot.gov/sites/fta.dot. gov/files/docs/Title_VI_QA_12.26.12.pdf. FTA includes LEP compliance in its Title VI circular. FTA also provides addi- tional guidance, https://www.transportation.gov/civil-rights/ civil-rights-awareness-enforcement/dots-lep-guidance. 188 FTA C 4702.1B, para. 5.b, ch. I–2. 189 The guidance provides: Title VI covers all of the operations of covered entities without regard to whether specific portions of the covered program or activity are Federally funded. The term “program or activity” means all of the operations of a department, agency, special purpose district, or govern- ment; or the entity of such State or local government that distributes such assistance and each such department or agency to which the assistance is extended, in the case of assistance to a State or local government. . . . Recipients are responsible for ensuring that all of their activities are in compliance with Title VI. In other words, a recipient may engage in activities not described in the Circular, such as ridesharing programs, roadway incident response programs, or other programs not funded by FTA, and those programs must also be administered in a nondiscriminatory manner. [emphasis added] FTA C 4702.1B, at ch. II–1. 190 FeIGon & murPhy, supra note 6, at 26; Title VI Fare Equity Analysis for Migration to E-Fare, trImet, Jan. 6, 2016 [hereinafter TriMet E-Fare analysis], https://trimet. org/pdfs/equity/2016-fare-equity-analysis. 191 TriMet E-Fare analysis, supra note 190 at 2.

29 The problems and solutions identified by larger fixed-route providers in their electronic payment fare equity analyses may prove useful to transit agencies looking for ways to ensure that their RSP- provided service complies with the nondiscrimina- tion requirements under Part 21. In addition, transit agencies have addressed some of the Title VI equity issues in their agreements with TNCs, for example, by including call center access as well as the typical app access to the TNC service. As noted supra Part II.A.2, Growth of Ridesourcing Services, RSPs appear to have made some movement toward providing methods of payment and reservation that provides alternatives to their primary app-based systems. There appears to be some overlap between the Title VI requirements, particularly LEP, and those for meeting ADA requirements, particularly in the provision of complementary paratransit service: Failure to provide meaningful access to paratransit programs due to LEP violations could result in ADA challenges as well as Title VI challenges.192 More- over, LEP requirements for signage and information would seem relevant to the app aspect of TNC service. It may be useful to evaluate whether to include RSP services, as applicable, in the Four Factor Analysis required to ensure meaningful access to programs and activities for LEP persons, as well as any resulting Language Assistance Plan.193 D. Drug and Alcohol Testing The Omnibus Transportation Employee Testing Act of 1991194 required DOT to issue regulations to combat prohibited drug use and alcohol misuse in the transportation industry, and established require- ments for testing of employees of various transpor- tation modes. In addition, 49 U.S.C. § 5331 requires recipients of § 5307, § 5309, and § 5311 funding to conduct preemployment, reasonable suspicion, random, and post-accident testing of public trans- portation employees responsible for safety-sensitive functions for illegal use of a controlled substance; to conduct reasonable suspicion, random, and post- accident testing of such employees for illegal use of alcohol; and required the Secretary to issue regula- tions implementing those requirements. DOT’s implementing regulations prescribe proce- dures for drug and alcohol testing for transportation employers, safety-sensitive transportation employ- ees (including self-employed individuals, contrac- tors, and volunteers as covered by DOT agency regulations), and service agents.195 FTA’s imple- menting regulations require recipients of § 5307, § 5309, and § 5311 funds to conduct controlled substance and alcohol testing of public transporta- tion employees responsible for safety-sensitive func- tions, including operating, dispatching, and maintaining revenue service vehicles. Those require- ments extend to contractors of such recipients and subcontractors of those recipients.196 FTA’s regula- tion includes “operating a revenue service vehicle, including when not in revenue service” under the definition of “safety-sensitive function”; the defini- tion of vehicle includes “van [and] automobile.”197 Although not specified in the regulation, FTA policy has been that applicability of the drug and alcohol testing requirements to taxi operators depends on the degree of passenger choice in select- ing the service provider. In the 2001 revision combin- ing the former C.F.R. Part 653 (drug testing) and C.F.R. Part 654 (alcohol testing) into C.F.R. Part 655, FTA explained the applicability of the taxicab excep- tion as follows: FTA policy continues to recognize the practical difficulty of administering a drug and alcohol testing program to taxi companies that only incidentally provide transit service. Therefore, the drug and alcohol testing rules apply when the transit provider enters into a contract with one or more entities to provide taxi service. The rules do not apply when the patron (using subsidized vouchers) selects the taxi company that provides the transit service.198 195 49 C.F.R. pt. 40, Procedures for Transportation Work- place Drug and Alcohol Testing Programs. FTA’s regula- tion is to be read in conjunction with the DOT regulation. 196 49 C.F.R. pt. 655, Prevention of Alcohol Misuse and Prohibited Drug Use in Transit Operations. Part 655 cov- ers the general requirements of FTA’s drug and alcohol testing programs; specifies the basic requirements of each employer’s alcohol misuse and prohibited drug use pro- gram, including the elements required to be in each employer’s testing program; describes prohibited drug use; describes prohibited alcohol use; describes the types of alcohol and drug tests to be conducted; addresses the testing procedural requirements mandated by the Omni- bus Transportation Employee Testing Act of 1991, and as required in 49 C.F.R. pt. 40; lists the consequences for cov- ered employees who engage in alcohol misuse or prohib- ited drug use; sets forth administrative, e.g., reports and recordkeeping, requirements; specifies how a recipient certifies compliance with the rule. 197 49 C.F.R. § 655.4. 198 Prevention of Alcohol Misuse and Prohibited Drug Use in Transit Operations: Final Rule, 66 Fed. Reg. 41,996, 41,999, Aug. 9, 2001, https://www.gpo.gov/fdsys/pkg/FR- 2001-08-09/pdf/01-19234.pdf. 192 See Jorge v. New York City Transit Auth, Civ. Action No. 1:14-cv-09946 (RA) (KNF) (S.D.N.Y. Dec. 14, 2014) (asserting NYCTA violated ADA, § 504, and Title VI by maintaining a policy, pattern, and practice of discriminat- ing against LEP applicants and customers of Access-A- Ride by denying them language access services). This liti- gation was settled. Id., Dckt. No. 64 (July 29, 2016). 193 See FTA C 4702.1B, para. 9, ch. III-6 to ch. III-9. 194 Pub. L. No. 102–143, 105 Stat. 952. The require- ments for FTA are codified at 49 U.S.C. § 5331.

30 case of traditional taxi service, if the transit system subsi- dizes services from only one company (i.e., exclusively Uber) leaving the passenger with no choice but to use the one service, the company is then considered to be “standing in the shoes” of the transit system and is required to have an FTA-compliant drug and alcohol testing program. . . . The fact that drivers may be independent contractors rather than employees of the carrier is also irrelevant as the tran- sit system has the relationship with the company, not the individual drivers.200 As of November 2017, no challenge had been identified to FTA’s interpretation of the applicability of Part 655 to TNCs. E. Data Collection The NTD is “the Nation’s primary source of information and statistics on transit agencies” and provides data that is the basis for the apportion- ment of formula funding.201 Agencies that receive or benefit from § 5307 or § 5311 formula grants are required to report to the NTD as a condition of receiving financial assistance under those programs.202 Covered transit agencies must report data for all public transportation services they provide, including shared ride ADA complemen- tary paratransit service. FTA requires that transit agencies identify the portion of total expenses directly related to operating ADA complementary paratransit services, including total operating expenses for demand response and demand response-taxi modes.203 In addition the NTD tracks transit agency contracting practices.204 The 2017 NTD Policy Manual does not reference RSPs. It is arguable, but not clear, that the NTD report- ing requirements that cover taxi service should apply to the same service if provided by RSPs. If so, failure on the part of RSPs to provide sufficient data for the As of November 2017, FTA had not amended the regulation to take TNCs into account, but had addressed the applicability of Part 655 require- ments—most notably the taxicab exception—to TNCs in guidance. FTA addressed a variety of issues in responses to FAQs.199 FTA advised that: • A contract, for purposes of determining the applicability of Part 655, may include an informal arrangement that “reflects an ongoing relationship between the parties” as well as a written contract. • Part 655 covers contractors who do not directly engage in public transportation operations. There- fore, independent drivers of TNCs are covered, regardless of their employee status with the TNC, unless the taxicab exception applies. • Part 655 does not apply when the passenger can randomly choose from a number of taxicab companies providing service, such as when the transit agency contracts with several taxicab com- panies to provide guaranteed ride home service, and the passenger selects the company to provide the ride home. • Part 655 does apply when the passenger does not select the taxicab company providing the ser- vice, such as when an ADA paratransit provider schedules the requested ride or when the transit agency provides vouchers that can only be used with one company. • Part 655 will not apply if the transit agency contracts with two or more TNCs and one or more taxicab companies (to ensure accessible service). So long as some passengers have more than one choice, the taxicab exception will apply to all of the providers involved. • Part 655 does not apply to projects funded with research dollars. • Part 655 does not apply to pilot programs (i.e., up to one year) that do not use any FTA funds. If the program continues beyond the one-year win- dow, the transit agency must either expand its list of providers or include TNC drivers into its drug and alcohol testing. FTA addressed the application of Part 655 to contract service providers in the context of TNCs: The FTA drug and alcohol testing regulations apply to all contract service providers who “stand in the shoes” of the transit system by providing transportation services to public transit patrons to make or complete a trip. . . . In the 199 Shared Mobility FAQs: Controlled Substance and Alcohol Testing Requirements, Dec. 12, 2016, https://www. transit.dot.gov/regulations-and-guidance/shared- mobility-faqs-controlled-substance-and-alcohol-testing- requirements. FTA uses the term “ridesourcing company” in the relevant FAQ responses. FTA’s definition of that term encompasses TNCs. [E-11] 200 FTA Drug and Alcohol Regulation Updates 3, Issue 60, October 2016, https://transit-safety.fta.dot.gov/ DrugAndAlcohol/Newsletters/issue60/pdf/Issue60.pdf. 201 National Transit Database Policy Manual, FTA Office of Budget and Policy, January 2017 [hereinafter 2017 NTD Policy Manual], at 3, https://www.transit.dot. gov/sites/fta.dot.gov/files/docs/ntd/57981/2017-ntd-policy- manual_2.pdf. 202 49 U.S.C. § 5335; National Transit Database: Amend- ment to Reporting Requirements and Non-Substantive Technical Changes; Final Rule, amending 49 C.F.R. pt. 630, 72 Fed. Reg. 68756, Dec. 6, 2007; Award Management Requirements, FTA C 5010.1E, § 3.j, National Transit Database (NTD) Reporting. 203 2017 NTD Policy Manual supra note 201, at 62. The GAO reported that the data reported did not meet GAO’s standards for data reliability. GAO-13-17, supra note 78, at 22–23. 204 GAO-13-782, supra note 16, at 4. The GAO used NTD information in support of the survey used to answer the questions mandated by MAP-21 for the report. Id. at 27.

31 employees of the first provider. DOL found that the contract was terminated because of loss of state funding, which was not covered by the § 13(c) warranty, and that employees whose positions are worsened solely because the project is terminated or its funds are exhausted are not eligible for displace- ment or dismissal allowances. Therefore the § 13(c) claim was not supported.209 If a contract using transit employees expires under its own terms and is then replaced by a contract with an RSP, it is possible that the change would not support a colorable § 13(c) claim,210 although such a claim may be supported due to carry-over provisions in the § 13(c) agreement in question. G. Employment Classification Employees enjoy protections and benefits not accorded to independent contractors, including employer contributions to social security, minimum wage guarantees, expense reimbursements, and compensation for overtime and unemployment. In addition, because of the doctrine of respondeat supe- rior, employee torts may give rise to liability on the part of the employer in instances where actions of an independent contractor would not do so. These protections, benefits, and liabilities are costs of doing business for employers. Many businesses designate workers as independent contractors to avoid these costs, which results in shifting certain costs to the workers themselves, and to some extent otherwise externalizing those costs. Although not uncommon in the overall economy, the independent contractor designation is particularly widespread in transpor- tation industries, like trucking and taxicabs.211 However, employment classification is a question of law, not business preference, and the business practice of classifying workers as independent contractors has given rise to a significant volume of litigation. Litigation brought by Federal Express (FedEx) drivers may influence the evolving law transit agencies to report as required could put those agencies in noncompliance under 49 U.S. C. § 5335 (National Transit Database). However, as of March 2017, the NTD apparently did not have data-reporting criteria for TNCs.205 Until the process is changed, to the extent that RSPs provide otherwise covered service, the transit agencies contracting for the service will not get credit for that service in the NTD data used for apportionment. F. Section 13(c) Under § 5333(b) of the Urban Mass Transporta- tion Act of 1964 (commonly referred to as § 13(c)), the U.S. Department of Labor (DOL) must provide a certification of employee protective arrangements (collective bargaining) before FTA may make any federal assistance (except for grants under §§ 5310 and 5311).206 However, it appears that historically— based on GAO reporting on transit agency contract- ing out—§ 13(c) has not been an impediment to contracting out transit service.207 While employees would maintain certain § 13(c) rights, such as the right to bargain collectively and the specific rights and benefits provided by existing collective bargain- ing agreements, in order for employees to prevail on § 13(c) claims for displacement benefits, the loss of employment must be caused by a federal project.208 Even if a project is FTA-funded, if it is cancelled because of loss of other funding, the federal project will not necessarily be found to be the cause of any resulting harm in employment. For example, in a 2016 decision, the DOL denied a § 13(c) claim involv- ing a transit agency that terminated a contract with a third party provider and replaced it with a contract with another provider who did not employ the 205 See, e.g., Pinellas Suncoast Transit (PSTA) Legisla- tive Committee Meeting Minutes, Mar. 1, 2017. 206 FTA Master Agreement § 24.d, Public Transporta- tion Employee Protective Arrangements, Oct. 1, 2017, https://www.transit.dot.gov/sites/fta.dot.gov/files/FTA%20 Master%20Agreement%20FY2017%20-%2010-1-2016.pdf; Mass Transit Employee Protections, Office of Labor- Management Standards (OLMS), 49 U.S.C. § 5333(b), https://www.dol.gov/olms/regs/compliance/compltransit.htm. 207 As of September 2013, Department of Labor reported to GAO that “after a search of their records and to the best of their knowledge, there has never been an instance where a transit agency has been unable to contract out public transit operations and other services because doing so would jeopardize Section 13(c) certification from the Department of Labor.” GAO-13-782, supra note 16. 208 See danIel duFF, Jane Sutter Starke, G. kent wood- man, leGal aSPeCtS releVant to outSourCInG tranSIt FunCtIonS not tradItIonally outSourCed 7 (Transit Coop- erative Research Program, Legal Research Digest 38, Transportation Research Board of the National Acade- mies of Sciences, Engineering and Medicine, Washington, D.C., 2011). 209 Russell M. Barber et al., v. County of Tioga, New York, DSP No. 15-13c-01, Oct. 4, 2016, https://www.dol.gov/ olms/regs/compliance/foia/transit/DSP_Claim/Barber_vs_ Tioga_15-13c-01FINAL.pdf. 210 See Sandoval v. Peninsula Corridor Joint Powers Board, DSP No. 12-13c-09, June 30, 2015, (expiration of Amtrak contract and replacement with another operator does not constitute an adverse effect linked to federal assistance) https://www.dol.gov/olms/regs/compliance/foia/ transit/DSP_Claim/Sandoval_v_JPB_12-13c-09_FINAL_ 2017.pdf. 211 Federal Court Orders Bay Area Taxi, Limo Compa- nies’ Owner to Pay Misclassified Workers $175K in Back Wages, Damages, Dep’t of Labor News Release, May 25, 2016, https://www.dol.gov/es/node/67313 (accessed Dec. 20, 2016).

32 provision making it easier for businesses to classify workers as independent contractors.215 This section reviews the common law factors applied to determine whether an individual is an employee or an independent contractor; require- ments under the FLSA, the NLRA, and the Federal Arbitration Act (FAA); and analogous cases involv- ing delivery truck, taxicab, and black-car drivers. Cases involving TNCs are discussed infra Part V, RSP Cases and Regulatory Proceedings. 1. Common Law Factors The common law of agency provides the common law test for determining whether an individual is an employee or an independent contractor.216 The Supreme Court famously addressed the common law test in Nationwide Mutual Insurance Co. v. Darden.217 Darden involved the construction of the term employee under the Employee Retirement Income Security Act of 1974 (ERISA).218 In constru- ing the statutory term, Justice Souter’s majority opinion read employee to incorporate “traditional agency law criteria for identifying master–servant relationships.”219 The Court followed its precedent of applying common-law agency doctrine to define concerning employment classification,212 because many of those actions have been adjudicated, result- ing in decisions that set forth standards for deter- mining whether similarly situated workers are independent contractors or employees. However, a key factor in the delivery driver cases is the applica- bility of the preemption provision of the Federal Aviation Administration Authorization Act of 1994 (FAAAA), which does not apply to passenger trans- portation.213 The further discussion of applicable federal law does not include FAAAA preemption. Employment classification litigation involving driv- ers for other gig economy services (in the event they get to trial)214 and taxicab drivers should also affect the direct of the law as applied to TNC drivers. The employment classification of RSP drivers could also be affected by changes in federal legisla- tion. While amendments to the Fair Labor Stan- dards Act (FLSA) and/or the National Labor Relations Act (NLRA) would have the clearest effect on the issue, other federal legislation could also make significant changes. For example, in 2017 the chairman’s mark of the Senate tax bill included a 212 Keith Cunningham-Parmeter, From Amazon to Uber: Defining Employment in the Modern Economy, 96 B. U. L. reV., 1673, 1675, n. 5 (2016). 213 The FAAAA preempts any state law “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). The Supreme Court ruled on meaning of that phrase in Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013). The First Circuit Court of Appeals has held that the FAAAA preempts a portion of the Massachusetts independent contractor statute, which presumes a person providing “any service” is an employee unless three conditions are met. However, the First Cir- cuit also held that the preempted requirement was sever- able, and that Massachusetts plaintiffs may prevail by making their case under one of the other two require- ments. Schwann v. FedEx Ground Package System, Inc., 813 F.3d 429 (1st Cir. 2016). 214 Singer v. Postmates, Inc., 4:15-cv-01284-JSW, Doc. 82 (N.D. Cal. Sept. 1, 2017) (order granting preliminary approval of class action settlement), http://www.impactlitigation.com/ wp-content/uploads/2017/10/Singer-v.-Postmates-Order- Granting-Prelim-Approval.pdf (accessed Feb. 20, 2018). In February 2018, the NLRB disclosed a 2016 NLRB advice let- ter finding that Postmates couriers were employees within the meaning of § 2(3) of the NLRA. Advice Memorandum from Barry J. Kearney, Associate General Counsel, Division of Advice, to Peter Sung Ohr, Regional Director Region 13, re Postmates, Inc. 13-CA-163079, Sept. 19, 2016, downloadable from https://www.nlrb.gov/case/13-CA-163079 (accessed Feb. 20, 2018). [E-14] 215 Erik Sherman, Tax Bill Could Increase Worker Status As Contractors, Decrease Benefits And Protections, ForbeS, Nov. 13, 2017, https://www.forbes.com/sites/eriksherman/ 2017/11/13/tax-bill-could-increase-worker-status-as-con- tractors-decrease-benefits-and-protections/#c80cca256fcb (accessed Nov. 28, 2017). The provision, Item III.K, Determi- nation of worker classification and information reporting requirements, Description of the Chairman’s Mark of the “Tax Cuts and Jobs Act,” https://www.finance.senate.gov/ imo/media/doc/JCX-51-17%20%20SFC%20Markup%20 11-9.pdf, was stricken from the version of the bill that was reported out by the Senate Finance Committee, Description of the Chairman’s Modification to the Chairman’s Mark of the “Tax Cuts and Jobs Act,” https://www.finance.senate. gov/imo/media/doc/JCX-51-17%20%20SFC%20Markup% 2011-9.pdf. 216 The ten factors are: (a) the extent of control which, by the agreement, the master may exercise over the details of the work; (b) whether or not the one employed is engaged in a distinct occupation or business; (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (d) the skill required in the particular occupation; (e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (f) the length of time for which the person is employed; (g) the method of payment, whether by the time or by the job; (h) whether or not the work is a part of the regular busi- ness of the employer; (i) whether or not the parties believe they are creating the relation of master and servant; and (j) whether the principal is or is not in business. reState- ment (SeCond) oF aGenCy § 220(2) (am. law. InSt. 1958). 217 503 U.S. 318, 112 S. Ct. 1344, 117 L. Ed. 2d 581 (1992). 218 Pub. L. No. 93-406, 88 Stat. 829. 219 Darden, 503 U.S. at 319.

33 Court held that a group of boners at a meat plant were employees for purposes of the FLSA, agreeing with the Circuit Court of Appeals that the work of the boners was part of the integrated unit of produc- tion at the plant. The Court further made clear that merely affixing an independent contractor label on what would otherwise be an employment relation- ship under the FLSA does not take the relationship out from under the FLSA.225 The Court in Darden noted this broad interpretation of the FLSA’s defini- tion of employment. In rejecting the respondent’s attempts in Darden to rely on FLSA cases to define employee, the Court emphasized that the FLSA defi- nition of employee covers “some parties who might not qualify as such under a strict application of traditional agency law principles” due to the FLSA’s expansive definition of employ.226 However, many courts have construed the FLSA more narrowly.227 The “suffer or permit” phrase, as pointed out in a 2015 DOL Administrator’s Interpretation, was language used widely in state child labor laws “designed to reach businesses that used middlemen to illegally hire and supervise children.”228 That language was part of the basis for the expansive interpretation of application of FLSA’s suffer or permit standard. However, in 2017, the then-new Secretary of Labor announced without explanation the withdrawal of that guidance.229 The Seventh Circuit has held that where two entities are found to be joint employers of a group of individuals, FLSA protection may be extended to those individuals even though they are independent contractors under the FLSA when only their work for each entity is considered.230 3. National Labor Relations Act The meaning of employee under the NLRA differs from that under the FLSA, since Congress—in the wake of N.L.R.B. v. Hearst Publications231—amended the NLRA to specifically exclude “any individual employee where a statute does not define the term. Finding that ERISA’s definition of employee was “completely circular” and explained nothing, Justice Souter applied the following common-law test for determining employment status: In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party’s right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instru- mentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.220 The Court also noted that all aspects of the relation- ship must be weighed, and that no one factor is deci- sive.221 Numerous commentators have addressed the problems inherent in applying these common law factors to the gig economy.222 2. Fair Labor Standards Act The FLSA: . . .establishes federal minimum-wage, maximum hour, and overtime guarantees that cannot be modified by contract. Section 16(b) of the FLSA, 52 Stat. 1060, as amended, 29 U.S.C. § 216(b) gives employees the right to bring a private cause of action on their own behalf and on behalf of ‘other employees similarly situated’ for specified violations of the FLSA.223 The FLSA’s definition of an employee is not particularly illuminating: “any individual employed by an employer”; the definition of employ includes “to suffer or permit to work.”224 In 1947, the Supreme 220 Id. at 323–24, citing Community for Creative Non- Violence v. Reid, 490 US 730, 751–52 (1989). 221 Id. at 324, citing NLRB v. United Ins. Co. of America, 390 US 254, 258, 19 L. Ed. 2d 1083, 88 S. Ct. 988 (1968). 222 E.g., Andre Andoyan, Independent Contractor or Employee: I’m Uber Confused! Why California Should Create an Exception for Uber Drivers and the “On-Demand Economy”, 47 Golden Gate u. l. reV. 153 (2017); Grant E. Brown, An Uberdilemma: Employees and Independent Contractors in the Sharing Economy, 75 md. l. reV. end- noteS (2016); Robert L. Redfearn III, Cyberlaw and Ven- ture Law: Sharing Economy Misclassification: Employees and Independent Contractors in Transportation Network Companies, 31 berkeley teCh. L.J. 1023 (2016); Carl Shaf- fer, Student Note: Square Pegs Do Not Fit in Round Holes: The Case for a Third Worker Classification for the Sharing Economy and Transportation Network Company Drivers, 119 W. Va. l. reV. 1031 (2017). These articles also discuss employment classification law in general. 223 Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69, 133 S. Ct. 1523, 1527, 185 L. Ed. 2d 636, 641 (2013). 224 29 U.S.C. § 203(e)(1), (f) (2012). 225 Rutherford Food Corp. v. McComb, 331 U.S. 722, 729, 67 S. Ct. 1473, 1476, 91 L. Ed. 1772, 1778 (1947). 226 Nationwide, 503 U.S. at 326. 227 Cunningham-Parmeter, supra note 212, at 1692–95. 228 David Weil, U.S. Dep’t of Labor, Administrator’s Interpretation No. 2015-1 (2015), https://www.blr.com/ html_email/AI2015-1.pdf (accessed Jan. 5, 2017). See also Benjamin Means & Joseph A. Seiner, Navigating the Uber Economy, 49 UC daVIS l. reV. 1511, 1523–27 (2016); Cun- ningham-Parmeter, supra note 212, at 1691–92. 229 US Secretary of Labor Withdraws Join Employment, Independent Contractor Informal Guidance, Press Release, June 7, 2017, https://www.dol.gov/newsroom/releases/opa/ opa20170607 (accessed Aug. 29, 2017). 230 Hall v. DIRECTV, LLC, 846 F.3d 757 (4th Cir. 2017). 231 322 U.S. 111, 64 S. Ct. 851, 88 L. Ed. 1170 (1944)

34 Subsequently, the NLRB invited parties and inter- ested amici to file briefs addressing the question of under what circumstances, if any, the NLRB “should the Board deem an employer’s act of misclassifying statutory employees as independent contractors a violation of Section 8(a)(1) of the Act.”238 [E-15] 4. Federal Arbitration Act Section 1 of the FAA provides that the FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”239 The Supreme Court has held that this exemption is confined to contracts of employment of “transporta- tion workers,”240 which term lower courts have held to be limited to those workers actually engaged in the movement of goods in interstate commerce.241 Thus, it is not surprising that the FAA exemption issue does not appear to have been raised in the context of TNC cases. As noted previously, major questions exist concerning the enforceability of arbitration clauses, with the circuit courts split over the issue of whether arbitration clauses may waive collective bargaining rights. Arbitration clauses also have played a signifi- cant role in preventing TNC drivers from pursuing employment misclassification and other actions against TNCs.242 5. Analogous Cases The employment status of delivery drivers pres- ents a potentially analogous situation to that of TNC drivers; cab drivers a more directly analogous situa- tion. A number of federal circuit courts of appeal have ruled on whether FedEx drivers are employees having the status of independent contractor” from the definition of employee under § 2(3) of the NLRA.232 However, it appears that in the context of TNC litiga- tion, the most commonly raised NLRA issue has been the fact that agreements that violate the NLRA are unenforceable under the FAA. Thus, the NLRA has been raised in TNC cases as a basis for invalidat- ing arbitration agreements,233 which typically include class action waivers. As of 2017, there was a split among the circuits as to whether the NLRA precludes class arbitration waiver provisions. Three circuits had held that class actions are waivable procedural devices; two circuits and the National Labor Relations Board (NLRB) had held that the NLRA prohibits class action waivers.234 The Supreme Court granted certiorari in the consolidated cases of Murphy Oil, Epic Systems and Morris v. Ernst & Young,235 heard oral argument on October 2, 2017, and was expected to decide the cases by June 2018.236 However, the question of whether misclassifying employees as independent contractors violates the NLRA may also prove relevant to TNC litigation. As of February 2018, this question was pending before the NLRB. In 2017, an NLRB administrative law judge (ALJ) held that a medical delivery company’s misclassification of its drivers as independent contrac- tors constituted a violation of § 8(a)(1) of the NLRA.237 232 NLRB v. United Ins. Co. of America, 390 U.S. 254, 88 S. Ct. 988, 19 L. Ed. 2d 1083 (1968). 233 Bekele v. Lyft, 199 F. Supp. 3d 284 (D. Mass. 2016) (upholding arbitration agreement). 234 Note: The Substantive Waiver Doctrine in Employ- ment Arbitration Law, 130 harV. l. reV. 2205 (2017). 235 Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015), cert. granted, 2017 U.S. LEXIS 680, 137 S. Ct. 809, 196 L. Ed. 2d 595 (Jan. 13, 2017); Lewis v. Epic Sys- tems Corp., 823 F.3d 1147 (7th Cir. 2016) (agreement waiv- ing rights to participate in collective bargaining unen- forceable under Federal Arbitration Act), cert. granted, 2017 U.S. LEXIS 691,137 S. Ct. 809, 196 L. Ed. 2d 595 (Jan. 13, 2017); Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016), cert. granted, 2017 U. S. LEXIS 689, 137 S. Ct. 809, 196 L. Ed. 2d 595 (2017). 236 Greg Stohr, Supreme Court Justices Suggest They’ll Split on Workers’ Class-Action Rights, bloomberG, Oct. 2, 2017, https://www.bloomberg.com/news/articles/2017-10-02/ justices-suggest-they-will-divide-on-worker-class-action- rights (accessed Oct. 5, 2017). In July 2017, a New York court held that until the Supreme Court resolved the issue, it would follow the Seventh Circuit in holding waivers of collective claims unenforceable under the NLRA. Gold v. New York Life Ins. Co. No. 653923/12, 2017 BL 247192, at *1, *6 (App. Div. 1st Dep’t July 18, 2017). 237 Velox Express, Inc., 15-CA-184006, JD-76-17 (NLRB, Sept. 25, 2017), https://www.nlrb.gov/case/15-CA-184006. [E-15] 238 Velox Express, Inc., 15-CA-184006 (NLRB, Feb. 15, 2018), https://www.nlrb.gov/case/15-CA-184006. [E-15] 239 9 U.S.C. § 1. 240 Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S. Ct. 1302, 1311, 149 L. Ed. 2d 234, 250 (2001). 241 E.g., McNamara v. Yellow Transp., Inc., 570 F.3d 950, (8th Cir. 2009) (holding that customer service representa- tive did not fall within § 1 exemption). 242 Elizabeth Chika Tippett & Bridget Schaaff, Misclas- sification in the Sharing Economy: It’s the Arbitration Agreements (July 14, 2017). rutGerS l. reV. (2018). See also, Carissa Laughlin, Arbitration Clause Issues in Shar- ing Economy Contracts, 2017 J. dISP. reSol. 197 (2017). See infra Part V, RSP Cases and Regulatory Proceedings.

35 and that FedEx in fact did so in terms of driver and vehicle appearance, times the driver works—albeit without setting specific hours—and how and when drivers delivered their packages. In addressing FedEx’s argument that there were details of the drivers’ work it did not control, the court noted that “the right-to-control test does not require absolute control. . . . FedEx’s lack of control over some parts of its drivers’ jobs does not counteract the extensive control it does exercise.”247 The court also found that—notwithstanding FedEx’s argument that it only controlled the results of its drivers’ work, not the manner and means of achieving those results— in fact aspects of FedEx’s control over driver behav- ior were not merely control of results under California law. The court also dismissed FedEx’s argument that the entrepreneurial aspects of the job precluded a finding of employment, citing Borello for the propo- sition that an employer cannot divide a job into numerous required steps and then disclaim employ- ment because the employer does not mandate exactly how each step is performed. The court found the facts of Borello, and of several other California delivery driver cases in which the drivers had acknowledged independent contractor status but that nonetheless had resulted in findings of employ- ment to be relevant to those of the FedEx drivers. The court also declined to follow the D.C. Circuit Court of Appeals in relying on a test of whether the workers have a significant entrepreneurial opportu- nity, as that is not the test under California law. In addressing the entrepreneurial opportunities in fact available to the FedEx drivers, the court found that they were subject to FedEx’s discretion as well, and that the right to control was material: “Whether FedEx ever exercises its right of refusal is irrelevant; what matters is that the right exists.”248 The court addressed the eight secondary right-to- control factors, none of which weighed in FedEx’s favor sufficiently to allow a holding of independent contractor status. Notably for purposes of evaluating the TNC employment status issue, the court observed that while the OA expressly identified the relation- ship as independent contractor, neither FedEx’s nor the drivers’ perception of the relationship is control- ling if as a matter of law a different relationship exists. The concurring opinion went further in expounding on the principle under California law that an independent contractor agreement cannot or independent contractors, with differing results;243 circuit courts have also addressed the employment status of other types of delivery drivers and of cab drivers. The following discussion includes two widely cited delivery driver cases and two cases involving for-hire vehicle drivers. Alexander v. FedEx Ground Package System, Inc.244—This case determined the employment status of a group of contract delivery drivers for FedEx. In stating the facts of the case, the court reviewed FedEx’s Operating Agreement (OA), which contained language aimed at establishing independent contrac- tor status, the extensive job requirements, and equip- ment and appearance requirements, which applied to the vehicles that drivers were required to provide and maintain at their own expense, and to uniforms, scanners, and other equipment that drivers could purchase from FedEx. The district court had granted FedEx’s summary judgment motion, finding that the entrepreneurial opportunities afforded the drivers— not FedEx’s right to control—was dispositive in hold- ing the plaintiffs to be independent contractors as a matter of law. The circuit court reversed, holding the plaintiffs to be employees as a matter of law. The court reviewed California’s right-to-control test under common law from S.G. Borello & Sons, Inc. v. Department of Industrial Relations245 and applied that test to salient aspects of the plaintiffs’ relationship with FedEx. First, the court found that the OA and other FedEx policies and procedures allowed FedEx “to exercise a great deal of control over the manner in which its drivers do their jobs,”246 243 E.g., Carlson v. FedEx Ground Package Sys., Inc., 787 F.3d 1313 (11th Cir. 2015) (reversing grant of summary judgment in favor of FedEx and concluding there was a genuine issue of material fact as to whether the drivers were employees or independent contractors under Florida law); Slayman v. FedEx Ground Package Sys., Inc., 765 F.3d 1033 (9th Cir. 2014) (reversing grant of summary judgment to FedEx and denial of partial summary judgment to plain- tiffs, holding that the drivers were employees as a matter of law under Oregon law); Alexander v. FedEx Ground Pack- age Sys., Inc., 765 F.3d 981 (9th Cir. 2014) (same, but under California law); Gray v. FedEx Ground Package Sys. Inc., 799 F.3d 995 (8th Cir. 2015) (reversed and remanded to dis- trict court because employment status is question of fact under Mo. Law and here reasonable jury could have found plaintiffs were independent contractors); FedEx Home Delivery v. NLRB, 563 F.3d 492 (D.C. Cir. 2009) (unfair labor enforcement denied because drivers determined to be independent contractors) (reversing agency decision that FedEx drivers were employees); FedEx Home Delivery, an Operating Div. of FedEx Ground Package Sys., Inc. v. Nat’l Labor Relations Bd., Nos. 14-1196, 15-1066, 15-1116 (D.C. Cir. Mar. 3, 2017) (unfair labor enforcement denied because drivers determined to be independent contractors). 244 765 F.3d 981 (9th Cir. 2014). 245 48 Cal. 3d 341, 769 P.2d 399, 256 Cal. Rptr. 543 (1989). 246 Alexander, 765 F.3d at 989. 247 Id. at 990. 248 Id. at 994.

36 sufficient indicia of an employment relationship between the plaintiff Drivers and EGL such that a reasonable jury could find the existence of such a relationship,”253 and accordingly reversed and remanded the lower court’s judgment granting the defendant’s motion for summary judgment. N.L.R.B. v. Friendly Cab Co., Inc.254—This case involved a dispute over whether cab drivers who leased their cabs from Friendly Cab Company were employees for purposes of the NLRA’s collective bargaining requirements. The NLRB had found the drivers to be employees, and the court would only reverse this decision if the NLRB had not correctly applied the law and if there was not substantial evidence on the record as a whole to support the NLRB’s findings of fact. The Ninth Circuit Court of Appeals engaged in a common law agency analysis to make that determi- nation. The court noted that the primary issue was the extent of control exercised by the putative employer, particularly the amount of supervision over details of the individual’s work, with entrepre- neurial aspects, risk of profit and loss, and the indi- vidual’s proprietary interest being additional relevant factors. The court found that in fact there was substantial evidence in the record that Friendly exer- cised significant control over the manner and means of the drivers’ performance. Moreover, the court relied on the fact that Friendly prohibited its drivers from engaging in entrepreneurial opportunities. The NLRB acknowledged that the following factors supported independent contractor status but that they were substantially outweighed by the evidence of Friendly’s significant control over the drivers’ manner and means of performance: payment of a fixed rental fee, no set hours or minimum hours, agreement providing that the drivers were indepen- dent contractors, lack of benefits, and no tax or social security withholding. The finding that the drivers lacked entrepreneurial opportunities was based in large part on the prohibition against drivers forming their owner relationships with passengers—they were prohibited from soliciting customers, from distributing their own business cards or phone numbers, or from accepting calls on personal cell phones. This contrasted with a prior Ninth Circuit case in which the cab drivers were free to make their own arrangements with clients and develop their own goodwill.255 Lack of ownership of the vehicles and inability to sublease them were also factors undercutting a finding of entrepreneurial activity. transform an employment relationship into an inde- pendent contractor relationship.249 Narayan v. EGL, Inc.250—Narayan discussed the standard for summary judgment in employment cases under California law. Several points are of interest in assessing likely outcomes in TNC litiga- tion, much of which has in fact been decided under California law. First, employment status is deter- mined under the applicable law, not the contract between the parties, which may be evidence but is not dispositive under California law.251 Second, under California law, an employee establishes a prima facie case of employment relationship by coming forward with evidence that the employee provided services to an employer, at which point the burden shifts to the employer to prove that the alleged employee is in fact an independent contrac- tor. Summary judgment in favor of the employer is only appropriate if the employer establishes “that a jury would be compelled to find that it had estab- lished by a preponderance of the evidence that the Drivers were independent contractors.”252 After rais- ing those two points, the court discussed the Borello factors, noting the interconnectedness of the factors and the need for a trial where the law demands weighing multiple factors. Finally, the court applied the Borello factors to the alleged facts of the case, suggesting that most of them pointed to the exis- tence of an employment relationship. The court concluded that “under California’s multi-faceted test of employment, there existed at the very least 253 Id. at 904. 254 512 F.3d 1090 (9th Cir. 2008). 255 SIDA of Hawaii, Inc. v. NLRB, 512 F.2d 354, 357–58 (9th Cir. 1975). 249 The concurring opinion stated: “Labeling the drivers ‘independent contractors’ in FedEx’s Operating Agreement does not conclusively make them so when viewed in the light of (1) the entire agreement, (2) the rest of the relevant ‘common policies and procedures’ evidence, and (3) Califor- nia law.” Id. at 998. Judge Trott then applied the descrip- tion from another case to the FedEx OA in the instant case: “a brilliantly drafted contract creating the constraints of an employment relationship with [the drivers] in the guise of an independent contractor model—because FedEx not only has the right to control, but has close to absolute actual control over [the drivers] based upon interpretation and obfuscation.” Id., citing Estrada v. FedEx Ground Package System, Inc., 154 Cal. App. 4th 1, 64 Cal. Rptr. 3d 327, 334 (2007) (internal quotation marks omitted). 250 616 F.3d 895 (9th Cir. 2010). 251 Interestingly, one preliminary study found that the presence of certain contract provisions intended to miti- gate misclassification-related litigation risk can in fact signal greater underlying risk of litigation. Moreover, the control scores for TNCs tentatively suggested that TNCs exercise a similar level of driver control as taxi and deliv- ery companies, which in turn suggests there is a higher likelihood of misclassification disputes for TNCs. Eliza- beth Tippett, Using Contract Terms to Detect Underlying Litigation Risk: An Initial Proof of Concept, 20 lewIS & Clark l. reV. 549, 586–87 (2016). 252 Narayan, 616 F.3d at 900.