August 15, 2017

Panelists discuss growing pains of maturing sharing economy at ABA Annual Meeting

State and local jurisdictions are dealing with the outgrowth of sharing businesses such as Uber, Lyft and Airbnb and how to regulate them in an ever-evolving industry.

Legal and industry experts explored the regulatory issues surrounding sharing economy on the program, “The Sharing Economy Matures — Will State or Local Control Win?” during the 2017 ABA Annual Meeting in New York.  The panel also reviewed local versus state conflict, what local legislators think and how to create greater collaboration between state and local governments as it relates to sharing economy.  The program was sponsored by the ABA Section of State and Local Government Law.

 “When we talk about the landscape for the sharing economy it’s a more complex landscape than Uber, Lyft and Airbnb where most of the attention has been,” said Nestor Davidson, an associate professor of Law at Fordham University.

To understand the industry, Davidson said you must recognize that the sharing economy goes beyond ride-sharing and short-term rentals. He said there is a “broad sector” of sharing economy, which includes the sharing of boats, bikes, airplanes, space rockets, office space, farmland, sports equipment, clothes and even science laboratories, amongst others.

Davidson, whose expertise is in local government law, noted that Arizona, Florida, New York and Utah have recently “stepped in” to exercise their authority to restrict short-term rentals. But he cautions against states rushing in and hampering local variations.

“It’s the price we have to pay to allow the interplay for local government in an industry that looks vastly different every six months,” Davidson said.  “States are moving too quickly to shut down that dialogue between sharing companies. In the long run, we’ll lose interesting policy innovation.”

Panelists agreed that some of the challenges to regulations are that the sharing economy is ever changing and the inability to properly enforce regulations could result in a disrespect for the law.

Matt Gewolb, director of legislation at the New York City Council, said that in a state like New York with such a diverse market, legislators think local legislation is, “a must.”  “What works on city streets doesn’t make sense in Albany,” he said.

Gewolb said though Uber and Lyft are global and popular, their traditional competitors in New York, taxicabs, have been successful under the governing of the New York Taxi and Limo Commission for decades. He said New York legislators are also conscious of the fact that their laws are often emulated around the country, so they don’t make hasty decisions and take the local concerns into perspective.

Gewolb said an area of regulation to watch in New York is freelance relationships. Last year, the New York City Council unanimously voted to protect freelancers under the Freelance Isn’t Free Act, which gives freelancers the right to a written contract, timely and full payment and also protection from any type of retaliation.

He said there is also pending legislation in which they are studying the feasibility of portable benefits for dual economy workers.  For example, if you work for one company and you move to another company, one can take their benefits such as healthcare or retirement with them.

Nicole Benincasa, regulatory counsel for Uber Northeast in New York, shared how Uber works with regulators and provided an overview of ride-sharing. She said in 2010, Uber set out to solve a simple problem, “how to get a ride at the touch of a button,” and seven years later it has had 2 billion trips.

She said with technological advancements like apps, states should be more welcoming to the spirit of innovation. And she said it’s important to regulate ride-sharing at the state level to avoid a “piecemeal” regulatory environment that would prohibit drivers from crossing multiple borders.

Janice Griffith, professor of law at Suffolk University Law School in Boston, doesn’t think legislation is an either-or situation but said the sharing economy could be both a state and local interest. According to her, state and local governments all have a vested interest in regulating the sharing economy because they are affected by the transactions, which makes it complex to make any blanket rules on it.

Her talk brimmed on how to get greater “synergy” between state and localities to bring regional regulation, especially to transportation. “We have a very fragmented system of government in the United States,” Griffith said.

Griffith, who moderated the panel, also added that sometimes where there is local regulation only, it creates inefficiencies, especially in the sense of cab drivers not being able to pick up passengers in jurisdictions where they’ve dropped someone off.  “We need a more cooperative approach between state and local government in terms of regulating the sharing economy,” said. Griffith, a proponent of regionalism.

Griffith believes that implementing sharing economy regulation in a regional scope could be successful. She said it could start off on a contractual basis just to see how it would work. The state and local governments could also define regulatory responsibilities and share data on sharing economy.

She agreed with Davidson’s view that state and local government should be open to experimental efforts.  “We have to rethink the way we have traditionally done regulation…maybe there is some local control and some state control and maybe at the same time.”