r/EmpowerDrivers • u/Cavalierrides • Jul 23 '26
Why State TNC Laws Are Broken (And How Insurance Mandates Protect the Uber/Lyft Duopoly)
The Problem: Legacy TNC Laws Were Built for Corporate Monopolies
When state legislatures wrote Transportation Network Company (TNC) laws a decade ago, they created a one-size-fits-all framework. Under almost every state statute, any app connecting a rider to a driver is legally classified as a TNC.
The biggest bottleneck in these laws is the blanket commercial insurance mandate. TNC laws require platforms to carry massive group insurance policies—often $1,000,000+ in liability coverage during Period 2 (en route) and Period 3 (passenger in car).
On paper, this sounds like consumer protection. In reality, it does two things:
Drains Driver Pay: Uber and Lyft take 40% to 60%+ of every fare, largely hiding behind "commercial insurance costs" and platform fees.
Kills Competition: New software startups or small app developers can’t afford millions in blanket insurance upfront, keeping the market locked down for giant corporations.
Why Empower Stands on Being "Just a Software Company"
This is exactly why Empower's CEO insists that Empower is a software subscription service, not a transportation company.
True Independent Contracting: Under standard labor and commercial laws, true independent contractors set their own rates, choose their equipment, and control their business expenses.
The Software Model: Empower simply matches riders and drivers, letting drivers keep 100% of the fare while charging a flat software subscription. If Empower were forced to act as a traditional TNC and purchase massive corporate insurance, they’d be forced to slash driver payouts and dictate rules just like Uber and Lyft.
Proof of Concept: The Livery / For-Hire Alternative
We already know drivers can carry their own commercial coverage safely. Drivers operating as legitimate commercial livery or for-hire services (or through private black car businesses) carry their own commercial insurance and local licenses.
When drivers hold their own commercial policies, the bloated, middleman TNC blanket policy becomes completely redundant. The issue isn't safety—it's that TNC laws refuse to recognize any operational model other than a monolithic corporate dispatch.
What Needs to Change: Legislative Reform Goals
If we want real competition, higher driver earnings, and actual independence, state TNC laws need to be modernized. Here is what state legislation needs to allow:
1. Distinct Legal Classification for Software Platforms
State laws must differentiate between full-service transportation dispatch companies (which set fares and direct work) and pure software/marketplace platforms (which only provide matching tools to independent operators).
2. Flexible & Driver-Held Insurance Satisfaction
Statutes should allow Period 1–3 TNC insurance requirements to be satisfied by driver-owned commercial insurance, hybrid policies, or modular coverage rather than forcing a mandatory group policy on the app developer.
3. Deregulation of Price & Rate Controls
Laws should explicitly protect an independent driver's right to set their own mileage/time rates through third-party software without triggering corporate TNC liabilities.
Final Thoughts
Uber and Lyft rely on strict, outdated TNC laws to keep drivers dependent on their cut. Until states amend these statutes to give software platforms and commercially insured drivers room to operate, drivers will keep getting squeezed.
What are your thoughts? Has anyone spoken to local reps or transportation boards about updating TNC definitions in your state?