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Uber Closes Shop in Austin due to Background Check Laws

Lyft follows suit

Uber announced it has shut down operations in Austin, Texas, now that the city plans to fingerprint all rideshare drivers.

Late last week, voters failed to pass Proposition 1, which would have overturned a previous bill requiring fingerprint-style background checks for rideshare drivers. The results were close, as only 56 percent of voters voted against the proposition, reports local news network KXAN.

Because the proposition failed to pass, drivers for companies like Uber or Lyft will require much more vetting. Also, they will be prohibited from stopping in lanes of traffic while picking up or dropping off passengers.

Uber said it would stop servicing Austin at 8 a.m. Monday. "Disappointment does not begin to describe how we feel about shutting down operations in Austin," Uber said in a statement. The company will continue operating in the suburbs of Austin.

Lyft made a similar announcement, saying it will "pause operations" in the city of Austin. "Lyft and Austin are a perfect match and we want to stay in the city. Unfortunately, the rules passed by City Council don't allow true ridesharing to operate."

Uber and Lyft could be in for a rude awakening if other cities follow in the footsteps of Austin. The vote follows a recent victory for ridesharing companies; two states have determined Uber drivers are contractors and not employees.