Illinois Passes New Laws for Ride-sharing Companies

Illinois Passes New Laws for Ride-sharing Companies

By: James Bizzieri

Ride-sharing companies such as Lyft and Uber allow drivers to operate as quasi-taxis in order to use their personal cars to take members to and from local destinations. Proponents of ride-sharing believe that it is a new frontier in public transportation. Opponents believe that this sub-industry is serving all of the functions of taxi companies, receiving all of the benefits of a taxi business, while not operating under the strict laws that govern taxi organizations. While big ride sharing companies have preemptively prepared for accident liability by erring on the side of caution and purchasing “excessive coverage,” many still believe that stricter laws must be imposed to firmly mandate liability insurance and other protections. The new statute may ultimately change the landscape for residents throughout Chicago land, including Oak Lawn, Orland Park, Burbank, and nearby communities who are injured in ride-sharing accidents.

The Specifics of the Law

Earlier this month the Illinois legislature submitted a bill to the state Senate that would require ride-share companies to function more like taxi cab companies. In complete contrast, last week a Chicago City Ordinance was passed that creates a separate licensing system distinct from the taxi medallion licensing system, which will govern ride-share companies. At the heart of this conflict is the fact that ride-sharing companies are currently not regulated, while other types of businesses that are part of the infrastructure of a city’s public transportation system are heavily regulated and subject to lots of red tape in order to legally operate in Illinois. Proponents of these regulations simply see them as a means for making this industry follow the rules, just like any other public transportation company, while opponents assert that regulation will stifle the growth of the ride-share industry and remove significant benefits and financial incentives currently enjoyed by cash-strapped drivers.

The Illinois State Senate Bill and the Chicago City Ordinance

The ride-sharing law submitted to the Illinois State Senate contains rules aimed at requiring ride-sharing companies to operate like traditional public transportation entities such as cabs and limo services. The law would require ride-share drivers to purchase commercial liability insurance, and to also have to pass mandatory background checks, in addition to other regulatory controls. Owners and the representatives of ride-sharing companies are the biggest opponents of this law and have voiced concerns that these regulations would stifle this budding industry while also decreasing the amount of jobs created by the companies.

 The Chicago City Council has moved forward with alternative legislation that many view as undermining the Senate Bill that still must be approved by Governor Quinn. Currently taxi companies are required to pay a licensing fee of $360,000 in order to receive a taxi medallion license, which gives them legal permission to operate in the

city. However, the new Chicago ordinance creates an alternative licensing system whereby ride-sharing companies are not required to receive the same licenses and designation as those required for taxi companies. This ordinance does not provide the legislature with nearly as much oversight over ride-sharing companies as the Senate proposal. The city ordinance creates a new and distinct type of double-tiered ride-sharing license. Under the ordinance, companies with drivers that average less than 20 hours each week will only have to pay $10,000 for a license to legally operate, while those with an average of more than 20 hours each week will be subject to a $25,000 fee and inspections by the city.

The new licensing system approved by the Chicago City council does not address many of the legal liability issues with ride-sharing companies. While the proposed Illinois state bill requires liability insurance coverage in order to mitigate potential accidents, the new license ordinance does not provide as many protections.

Do you have auto accident-related legal issues or questions? Contact an auto accident attorney here at the Bizzieri Law Offices in Chicago, IL for any legal questions that you have.