North Carolina has become an attractive market for smartphone-based car services such as Uber and Lyft, which are drawn to the state's mid-sized cities that have college students and young professionals but lack extensive mass transit. It's also one of many states where little regulation exists outside of traditional cab and limo services.
Uber currently offers rides in 10 cities in North Carolina, ranging from Wilmington and Asheville to the larger Raleigh and Charlotte. The company says that's more than any other state but California. Six of those cities have populations greater than 200,000, and all are home to universities.
Continue Reading Below
The companies' expansion has legislators in North Carolina and elsewhere scrambling to study their business models ahead of sessions in 2015 when they could address insurance, car inspections or criminal background checks. Throw in concerns from traditional taxi companies and insurance lobbyists, and Uber and Lyft's public policy staffs should stay busy.
At a meeting this week of North Carolina's Revenue Laws Study Committee, co-chairwoman Rep. Julia C. Howard said she anticipated someone would introduce a bill, but she wasn't aware of a specific proposal yet.
"We're getting into some tall weeds here," Howard said, referring to the nuances involved after a colleague asked about pricing differences between Uber, Lyft and taxis.
Lyft and Uber use a smartphone app to link customers with drivers selling rides in typically noncommercial cars or SUVs, allowing people with little or no professional driving experience to make money. Uber also works with licensed limo drivers in some markets. Both services make drivers undergo criminal and traffic background checks, and drivers are rated by customers. Uber and Lyft say they also provide commercial auto insurance in North Carolina that kicks in when rides are ordered.
At least 20 legislatures are likely to take up legislation on such services in 2015 after several passed laws this year, said transportation analyst Douglas Shinkle of the National Conference of State Legislatures.
"This is definitely the most fast-moving, from kind of zero to 60, policy issue ... that I've worked on since I've worked at NCSL," said Shinkle, who's been with the organization since 2005.
At the North Carolina meeting, Uber and Lyft touted their insurance coverage and background checks — two key areas considered by legislatures in 2014. While several of those bills failed, Colorado passed a law to regulate the companies, and California lawmakers set insurance standards.
"We're seeing all over the country that cities and states are taking interest in companies like Uber because what we're seeing is that consumers are flocking to these new technologies," Rachel Holt, Uber's Regional General Manager for the East Coast, told North Carolina lawmakers. "We're very supportive of reasonable, commonsense regulations."
However, Uber and Lyft have faced several lawsuits in the past year across the U.S., claiming the companies operate in violation of state and local laws governing taxis.
Michael Solomon, president of the Taxi Taxi cab service in the Raleigh area, said Uber and Lyft drivers should obtain commercial license plates and have more extensive commercial insurance, just as traditional cab services are required to do.
"Any person who collects a passenger for a fee, no matter how it's collected, should be held to the same standard," he said.
The Property Casualty Insurers Association of America told North Carolina lawmakers that Uber and Lyft should offer more coverage for drivers any time they are logged into the app and available to drive. While the companies offer commercial coverage when drivers are on their way to pick up a customer or have them in the vehicle, PCI attorney Oyango Snell said there's a significant gap during the period when drivers are waiting to line up a fare.
During that period, Uber and Lyft drivers in the state rely on a combination of their personal policies and contingent liability coverage provided by the companies.
A North Carolina-based scholar on entrepreneurship said regulation for Uber and Lyft must strike a balance "between the 'Wild West' and the very strict rules that apply to old economy players."
"I don't think the answer lies in applying the same framework to this new player," said Arvind Malhotra, a professor at the Kenan-Flagler Business School at the University of North Carolina. "New rules and regulations have to be crafted to make it a level playing field."
The on-demand, GPS-based car services aren't just appealing to riders — the flexibility is also drawing drivers who never worked in the industry. Jeremy Collins, 31, began driving his 2011 Honda Accord for Uber in July, a few weeks after it launched in Durham. He planned to drive part-time to earn extra money while his wife completes a graduate nursing program at Duke, but he ended up quitting his job as a waiter. He says he never drives more than 35 hours a week, but can make $1,300 in that time.
He lives in an apartment building near campus that's home to a lot of graduate students, so he can sit on his balcony with a coffee and wait for the app to match him with riders. He typically ferries students and others in the Duke community, and he's worked out a rhythm where he says he rarely works a late night.
"I'm able to keep us afloat with our Uber pay," he said. "I don't have a boss, and I work when I want. ... It's worked out really well for us."