Corporate travel management is a crucial aspect of any company as it involves managing the corporation’s strategic approach to travel. The aim of this white paper is to outline and discuss in details the various risks associated with corporations hiring unregulated transportation network companies (TNC’s) such as Lyft and Uber to transport their employees. This paper gathers information from several sources to provide facts about both the pitfalls and shortcomings that are inherent to this new industry and the problems that corporate clients risk facing when they use the unregulated TNC’s.
In an attempt to motivate and retain their employees, organizations are always trying to find better ways of creating a healthy, enjoyable and safe work environment. This also extends to corporations striving to provide safe, convenient and comfortable travels. Choosing the right company to provide the transportation services is critical, since employers have to provide a duty of care to their employees by using companies that do not put their employees at risk. Therefore, this paper seeks to provide a better option for corporate transportation.
After thorough research, it is clear that licensed chauffeur driven transportation companies are the best solution for providing transportation for corporations. Just like corporations, chauffeured transportation companies are professional and focus on delivering the best customer service.
Transportation network companies (TNCs) such as Lyft and Uber are increasingly becoming popular in the transport industry. They enable a person to get point-to-point rides via smartphone applications easily. Since they are a new industry, they do not have clear regulations, and they have become controversial, attracting mixed reactions from stakeholders. As a result, local, regional and state agencies have responded differently, with some communities welcoming TNCs while others pursue legal action to limit their operations. The taxi industry is a good example, as they argue that TNCs carry out illegal taxicab operations that steal their business. Many of these companies claim to be technology firms and not transportation providers, avoiding legal regulations as well as the required standards.
Some governments, states, and communities have started to enact laws and regulations to govern TNCs and provide a legal framework. The Florida Senate has passed a new state law to govern TNCs, TNC vehicles, and TNC drivers. However, in most states, TNCs remain unregulated, and many communities have banned their use. The legal ambiguity of these TNCs comes with many risks and challenges. In comparison, chauffeur driven transportation companies have been in operation for many decades and have clear regulations and licensing. Almost uniformly, the federal government and state legislatures require that these companies must hold a transportation license, subscribe to an insurance plan for passenger transportation, and adhere to specific safety standards.
It is critical to discuss and understand the various risks associated with corporations using unregulated TNCs, and to enlighten people in the corporate environment about the shortcomings of these organizations and the risks they expose themselves to when falling short of standard Duty of Care expectations. In addition, this paper will suggest and discuss a better and safer means of transporting employees.
Transportation is always a major aspect of any company, be it for employees or goods. In most corporations, transportation is purchased by a travel manager, procurement officer or the administration itself. Organizations that do not own any means of transporting employees have to outsource the service from external transport providers. Since 2010, several private companies have come into the transportation services market by providing new travel options which use digital technology to offer automated private ride service. The most popular companies are Lyft and Uber and have expanded rapidly across major cities in the world. In many cases, those in charge of booking transportation for employees face a difficult choice of deciding between using the TNCs or licensed chauffeured transportation companies.
Since they entered the industry, TNCs have become increasingly popular among passengers and corporations are more frequently using them to transport employees. Proponents of the TNCs argue that these companies provide innovative services which offer convenience, comfort, personal experiences, and sufficiency. However, they fail to point out the risks that come with them. TNCs do not fit into any particular regulatory schemes and have led to disruption in the transportation service market. The use of unregulated TNCs by corporations poses several risks to both the corporations and the employees. Regulation of this new industry has been a challenge to many authorities and state agencies as it’s hard to classify them into a particular industry between technology and transport; as such, the missing piece here is the importance of regulation. While the ease of using a TNC application may be appealing, TNC companies and drivers are not under a regulatory microscope, and as such, these companies do not necessarily have their clients interests at heart: regulatory policies help ensure public safety.
Corporations have the freedom to choose any means of transporting their employees which are convenient for them. Though unregulated TNCs have some advantages, they also pose many risks to both the employees and the corporation as well. Much has come to light over the last two years regarding the shortcomings that can be associated with unregulated TNC’s and the mobile app transportation.
Risks associated with corporations using unregulated Transportation Network Companies
- Insurance Ambiguity
Unregulated Transport Network Companies do not have a specific insurance policy that applies universally across the companies, vehicles, or drivers. Every TNC has some insurance requirements for the drivers, but no universal requirement exists, so as a client there is no way of knowing if the passenger is properly protected. This creates a situation of insurance ambiguity whereby there is no clarity on who is liable; between the TNC and the TNC driver. As a result, corporations may be exposing their employees to huge risks by using unregulated TNC’s. For instance, in the case of an injury during the ride, the employee can only file a suit against the driver’s personal insurance policy, and this might not even cover him or her (Gallegos, 2014). In fact, several states have issued warnings to passengers that TNC’s may not cover them in an accident, so while the cost of service may not be affected, if something goes wrong, a passenger’s rights can be impacted. It is also important to note that chauffeur driven companies have much higher insurance requirements, which are meant to ensure the safety of the passengers.
- Duty of Care
There has been an increased focus on employers’ Duty of Care to their employees both domestically and abroad, including the employers’ obligation to understand and mitigate the risks their employees may face during transportation (Fisher & Phillips). Therefore, employers have to take reasonable steps to ensure the safety, health, and wellbeing of their employees. Transporting employees through ridesharing companies increases the level of risk for the employees, and this heightens the corporate liability of employers. Traditional ground transportation operators have well-established business operating standards which give them public trust and confidence. Contrary, unregulated TNC’s have poor, or no operating standards and are a risk to passengers. Corporations could face legal consequences for their inability to maintain a standard Duty of Care, putting forth a negative company image.
- Unprofessional Drivers
It’s not uncommon for TNCs such as Lyft and Uber to deploy unprofessional drivers who do not have adequate training. The requirements for one to work as a TNC driver are not regulated and are different for each company. For instance, Uber’s requirements for their drivers are not similar to Lyft’s requirements or Sidebar’s. In Pennsylvania, for example, chauffeured driven vehicles must be licensed drivers, often carrying advanced CDL licensing, go through mandatory training, are cleared through state and federal background screenings often including drug testing and FBI fingerprinting and are strictly regulated both at the state and federal level. On the other hand, Lyft and Uber drivers only need to have a regular driver’s license, meet an age requirement and have a fully functioning car. This creates doubts about the drivers’ competence, and users have no assurance that their employees are in safe hands. Also, most of these companies do not carry out adequate background checks on their drivers; considering these facts, would it be prudent for a corporation to use TNCs without any knowledge about the drivers?
- Lack of regulatory oversight
TNC transportation services are based on digital technology. Most clients would never consider that drivers do not meet with an administrator, superior, or human resources representative on a regular basis. As a result, there is little or no oversight on their drivers or on the cars that they drive. The Chief Operating Officer of Kevin Smith Transportation Group, Adam Sitsis, says, “It’s alarming that TNCs do not have anywhere near the level of regulatory oversight which established limousine and ground transportation industry businesses have.”
- Surge Pricing
According to Juggernaut (2014), whenever there is an increase in demand, unregulated TNC’s automatically increase per mile prices leading to surge pricing. The new fare depends on the number of requests made and the number of drivers available. Corporate clients risk price fluctuations and this could drive up the cost of transportation for the corporation. Uber, for instance, uses surge pricing to encourage more drivers to drive during busy times. As a result, users are forced to pay higher fares during weekends or other busy times. This has been such a menace to the extent that some authorities have had to intervene. In Delhi India, for instance, the government suspended the surge pricing of all TNC’s in April 2016. Delhi’s Chief Minister, Arvind Kejriwal described this practice as “highway robbery” (Toor, 2016).
Considering all the above risks and drawbacks associated with unregulated Transport Network Companies, it is clear that TNCs are not the best option for corporations to use to transport their employees. Corporations risk facing legal action for failure to exercise their legal and moral duty of care. In addition, employees are exposed to the risks and may even suffer as a result. The only realistic solution to this issue is to use background checked, licensed chauffeurs, from an insured and regulated industry. This can be achieved by using chauffeur driven transportation companies instead of the unregulated Transport Network Companies.
Why Choose Chauffeur Driven Transportation Companies?
The safety and professionalism exhibited by a chauffeur is the reason why many companies and individuals have relied on them for years to serve their employees and clients. Whether it’s for business travels, airport transfer, or any other employee transportation, choosing a chauffeur service is a great option for corporate clients. It also cannot be overlooked that chauffeurs are company employees; they have a standard of service to provide to their clients that is directly linked to the company itself. As such, clients can step into every chauffeured vehicle knowing that it is the duty of the driver to ensure that they arrive safely, in comfort, and on-time. Does a TNC driver have any obligation to get a client to their appointment on time, or to ensure their comfort? The variation between the quality of service that TNCs provide points towards a corporate necessity to hire professional drivers in order to avoid the risks associated with these companies.
- High-quality Vehicles
Corporate clients should travel in style, comfort, and safety. Unregulated Transport Network Companies cannot offer this as they only require their drivers to have a fully functioning vehicle. Chauffeured transportation companies, on the other hand, provide vehicles that meet the clients’ needs. A company like Kevin Smith Transportation Group, for instance, owns and operates a fleet of vehicles that includes limousines, executive vans, and luxury sedans. TNC drivers are not required to maintain their vehicles. Hence drivers avoid regular vehicle maintenance to save costs. On the contrary, chauffeured transportation companies service their vehicles and maintain only the best ensuring that passengers are safe and reach their destinations on schedule.
- Strong Regulation and Licensing
Unlike the unregulated transport network companies, chauffeur driven companies follow clear and structured laws and regulations across the globe. Chauffeur driven cars are required to hold a national transportation license or a proper authorization depending on the state authority. Chauffeurs are also required to hold a commercial driver’s license. Therefore, corporate clients can be sure to get superior service without any legal issues.
All chauffeur driven transportation companies are required to have special insurance which fully covers the passengers. This is different from the unregulated TNCs where passengers have no assurance that they will be covered in case of an accident. Therefore, corporate clients can rest knowing that the chauffeur driven company’s insurance will cover their employees in the event of an injury.
- Customer Care
In their transport services provision, chauffeur driven companies prioritize giving their clients quality service over attempting to perform a high volume of trips; this is in part due to the fact that it benefits chauffeured companies to create lifelong customers. The companies, therefore, take all the necessary steps to make travel quick, comfortable, safe, and convenient. TNC drivers conversely may never encounter the client that they drive again; their aim is simply to get as many fares as possible. It cannot be overlooked that when an important client or employee needs to travel, the chauffeur’s willingness to go above and beyond to deliver extra effort to help their clients may be the difference between keeping and losing an asset.
Chauffeurs are professional drivers, and undergo strict background checks before the respective companies hire them. In Pennsylvania, insurance providers mandate that each driver undergoes an annual physical, a five year background check upon hiring, and a five year motor vehicle check. They are trained to monitor traffic and identify any disruptions as well as the measures they should take in case of anything. The vehicles are always well maintained, so passengers do not have to worry about safety issues. For instance, in Pennsylvania, transportation companies are required to inspect their fleets frequently, documenting those inspections for possible random audits, ensuring they are in good condition before driving on the highway to pick up passengers. Also, companies like Kevin Smith Transportation Group have GPS tracked vehicles allowing them to provide real-time updates to the companies so they can ensure their employees are delivered safely and on-time.
The purpose of this white paper is to highlight and explain the various risks that corporations expose themselves and their employees to when they book unregulated transport network companies, and to suggest a better alternative. It is clear that TNC’s have low standards as they do not adhere to any particular industry regulations. Hiring TNCs is a matter of trust as the companies cannot guarantee passenger safety, driver suitability and compliance with the law. Therefore, it’s quite clear that using their service is at your own risk and judgment, as stated in the Uber terms and conditions app. This exposes employees to several risks and can be viewed as a failure to exercise Duty of Care by the employer.
However, corporations can exercise Duty of Care by getting a better alternative to ensure that their employees travel safely and comfortably. Chauffeured transportation companies are the best option as they address all the risks and drawbacks of the unregulated transport network companies. Corporations can really benefit by choosing chauffeur driven companies over the unregulated transport network companies, and ensuring that the safety and quality of service that they want to provide to their clients and employees is equally important to the transportation companies that they choose to partner with.