Uber’s future

While politicians debate local control, Texas remains unprepared for the road ahead.

Let it never be said that Uber isn’t efficient — it took only two days for the company to leave town after Austin voted to keep regulations on transportation network companies. That turnaround seems particularly expedient given that the regulations, such as fingerprint background checks, don’t go into effect until February 2017. Meanwhile, Uber continues to operate in other cities that have fingerprint regulations, such as New York City and, yes, Houston.

There’s nothing in Austin’s rules that actually prevents Uber and similar companies from operating within the city. So why did the company flee?

The current Uber battle going on in Austin isn’t about regulations. It is a fight about power, politics and employment policy.

Last month, Uber paid $100 million to 385,000 drivers in California and Massachusetts to settle class-action lawsuits that raised the question of whether drivers were independent contractors or full employees. That’s a hefty figure, but it is less than the $730 million that drivers missed out on because of the different classification, according to court documents released last week.

Each rule that further intertwines Uber and its drivers works to bridge that gap between contractor and employee, as Inc. magazine has pointed out. Rigorous background checks, signage requirements and anything else that tells drivers how to do their work just makes the so-called gig economy look like a normal day at the office — complete with required benefits and reimbursements.

There’s no bright-line difference between the two employment categories, even if that difference is worth hundreds of millions of dollars. It should be little surprise that Uber is fighting tooth and claw to ensure that its drivers look like independent contractors in the eyes of the federal government. Dropping $9 million on a municipal election, as Uber and its allies did earlier this month in Austin, becomes a worth- while investment if it means the company can save billions in labor costs in the long run.

While Uber may have lost that battle, it’s looking to win the war by putting pressure on the Legislature to change regulations all across Texas.

Shutting down in Houston, as Uber threatened earlier this year if City Hall didn’t change fingerprinting regulations, would hurt Houstonians. Shutting down in Austin would hurt our elected legislators and their staffers, who now have to rely on rickety and unreliable taxis as they stumble home from the Cloak Room or other notorious politico watering holes. Those are the people who write the rules, and oft-made promises of small government have a way of going out the window when elected officials are somehow inconvenienced. So look forward to an upcoming legislative session where the people in the Pink Dome pretend they’re on City Council.

Instead of trying to overturn Austin voters or Houston’s City Hall, Texas legislators can show they truly understand the disruptive nature of new technologies by preparing for the next step in Uber’s business plan: self-driving vehicles.

Austin has already become a testing ground for Google’s own robotic car and the Texas A&M System has recently proposed a new research campus that will focus on autonomous vehicles. The rest of the state is less prepared for this new technology, which relies on detailed maps and well-demarcated roads to get around safely. A smart car doesn’t know what to do when a construction worker waves an orange flag. The lights and siren of an ambulance are designed to alert people, not machines. If Texas really wants to be a state friendly to technology, then we have to start planning now for an infrastructure that will need to talk to robots instead of drivers.

This sort of planning will take effort and funding from our legislators, and despite all our technological progress, there’s no app for that.