California First in Nation to Regulate Ridesharing

Web-based ride-hailing companies will have to make sure drivers undergo training and criminal background checks and have commercial liability insurance

California became the first state in the country to set rules for upstart rideshare companies.

Under the plan approved on Thursday by the state's Public Utilities Commission, online-based companies such as Lyft, Uber and Sidecar will have to meet certain requirements before they can seek a permit to operate. The companies rely on smartphone applications to connect riders and drivers who use their own vehicles.

"Today, we have an opportunity to introduce groundbreaking regulation in the transportation industry," commission President Michael Peevey told the Associated Press before the vote.

New businesses are trying to make it easy for people to share their property, be it cars or houses, and earn some money.

But they face opposition from taxicab and limousine companies who complain they're undercutting their business without being subject to regulations.

The issue came to a head in Los Angeles in June when hundreds of taxi drivers surrounded Los Angeles City Hall and honked their horns to protest the startups.

Under the new rules, companies would have to undergo driver training and criminal background checks. The companies would also have to carry insurance that is equal to what is required of cab drivers, and implement a zero-tolerance policy on drugs and alcohol.

Regulators hope the new rules “strike the proper balance between safety and innovation.”

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Copyright AP - Associated Press
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