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Habitu Sallehu pays hundreds of dollars a year to be a legal for-hire cabdriver in Seattle. The fees help pay for detailed city inspections of his records, his Toyota Prius, and the entire for-hire industry.

Lately, the 43-year-old Ethiopian émigré has seen drivers offering the same services as he does in cars with furry, hot-pink mustaches attached to their grills. But the drivers for that company, Lyft, and a second outfit, Sidecar, operate without any licensing or inspections from the city.

A third service, UBERx, also allows unlicensed drivers and vehicles into its ride-sharing fleet. The city says their lack of licenses makes the services of all three companies illegal and potentially dangerous.

But that hasn’t prompted the city to try to stop the increasingly popular illegal ride-sharing companies. The smartphone applications the companies use to pair riders with drivers have become a hit since the companies started competing against each other for Seattle business in April. And the City Council is open-minded about letting the companies stick around permanently.

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Seattle Councilmember Sally Clark said she’s impressed with the innovative approach to offering quick, affordable transportation in dense, urban areas, but she and other council members are on the fence about whether Seattle should find a way to make their services legal, as is. The current taxi and for-hire cab industry has been highly regulated in Seattle for decades, with caps placed on the number of licenses available and expensive fees used to fund the monitoring of drivers.

Lyft and Sidecar suggest their drivers are like neighbors and friends who will pick you up, not for a certain fare but for a “donation.” UBERx charges passengers the same rate as taxis, but says there’s no need to tip drivers.

“Meet new people and keep extra cars off the road,” says Sidecar’s website. “With Sidecar, you sit in the front seat, chat with your driver and even choose your own music. When’s the last time you did that in a cab?”

Riders for Lyft and Sidecar use credit or debit cards linked to the app to pay however much they want per trip — a business model that’s difficult for legal for-hire drivers to compete with.

“They certainly do a great job of presenting a story to consumers that this is kind of community-oriented: ‘Hey, you’re gonna get a ride with your new buddy,’ ” Clark said. “But the reality is they’re acting a whole lot like for-hire service drivers.”

Base pay: $18 an hour

Take 50-year-old Lyft driver Sylvester Bush, for example. The riders Bush has been picking up on Capitol Hill and downtown have rated him one of Seattle’s best Lyft drivers.

But he’s not picking up riders just because he’s in the neighborhood. Bush drives from Renton to work as many busy nights as he can in Seattle. He says the contract job, which pays a base hourly rate of $18 plus commission, came at just the right time in his life.

After March, he knew he wouldn’t be getting any more unemployment or disability checks, and his job hunt wasn’t turning up anything.

“I prayed for a job that I could do that was not hard on my body,” Bush said.

He said his prayers were answered when he found a Craigslist ad for Lyft.

He completed an in-person interview, passed a criminal-background check, had his vehicle inspected and went through an orientation with a couple other drivers who would soon put Lyft’s pink mustache on the front of their cars. Sidecar and UBERx say they also do criminal-background checks and vehicle inspections to screen drivers.

Business was slow at first as Bush waited for rider requests to show up on his phone, but then it picked up fast. At the end of his best week so far, Bush said he made more than $700. But from that, he has to deduct the cost of gas, wear-and-tear on his car and taxes on it come next April.

Bush doesn’t see how much money he makes per mile driven because Lyft riders “donate” as much or as little as they want through the app for each trip. He just sees how much he makes total at the end of the week. The same goes for Sidecar drivers.

Sidecar’s passengers can stiff a driver altogether if they want, as one staffer for Councilmember Clark found out when he signed up to be a driver himself. His undercover experiment was part of a city analysis of how businesses like Sidecar work.

UBERx, on the other hand, has set mileage rates that end up costing the rider something similar to an average taxi ride, said UBERx’s regional manager, Brooke Steger. The advantage for an UBERx passenger is that it’s still an affordable ride that can come by quickly. Much but not all of its fleet consists of hybrid vehicles.

Steger says there are benefits for drivers as well — they create their own schedule, don’t need to lease a vehicle, use an efficient dispatch system, and don’t have to handle any cash.

But Denise Movius, of the city’s administrative and finance department, said the city is concerned that drivers may not be as protected by their insurance as they think when driving others around.

Although all three companies require drivers to have a personal auto insurance policy, Movius said those policies may not fully cover accidents that happen while the driver is offering a commercial service — drivers need an extra commercial policy for that.

Representatives for Sidecar and Lyft said their million-dollar insurance policies cover auto damage and injuries to both drivers and passengers. UBERx has a $2 million policy to cover passengers and drivers, but recommends a commercial insurance policy for its drivers.

Movius also said she doubts the companies are upfront about the misdemeanor penalty for operating as an unlicensed for-hire driver in Seattle: a $1,000 fine and up to 90 days in jail. That’s one reason, she said, the city hasn’t brought down the enforcement hammer on illegal ride-sharing app drivers: It’s a harsh penalty for a lot of college students and low-income drivers looking to make some extra money, she said.

Playing field not level

Meanwhile, three city inspectors actively fine legal for-hire drivers for violations all the time, said the president of East Side For Hire, Samatar Guled. Sting operations sometimes catch for-hire drivers picking up people who flag them down, something only licensed taxi drivers are allowed to do.

Police also fine them. Last month, for instance, a police officer pulled Sallehu over in the South Lake Union area when he saw a woman open Sallehu’s door at an intersection where he was stopped, then walk away. The officer interpreted it as Sallehu trying to solicit an illegal ride, according to a police report, and gave him a $513 ticket.

Guled thinks Sallehu can fight the ticket, but still views the scrutiny of his actions as harassment and, in light of the city’s dismissiveness toward unlicensed drivers, discrimination.

“Which is more safe: a driver who is licensed or a completely unlicensed car and driver?” Guled asked. “I don’t like to bring up race, but we’re almost all East African immigrants trying to play by the rules and the city is coming after us. Why is that?”

The influx of unregulated ride-sharing services has hit taxi drivers hard too, said Tommy Key, general manager of Yellow Cab’s Puget Sound Dispatch.

“The drivers feel if they are being regulated by the city so hard and paying all these fees, these people need to be doing the same to level the playing field,” Key said.

Movius and Clark said the city hasn’t come down on the ride-sharing companies or their drivers because it’s developing a strategy to respond to the entire trend — and aiming to pass legislation by the end of summer. One of the options discussed at City Council meetings is lifting the city’s cap of 200 for-hire licenses so that Lyft, Sidecar and UBERx drivers can be regulated in some way by the city as well.

The city is also trying to get consumers to take an online survey about taxi and for-hire services to get a better idea of how Seattle’s increasing population has changed demand.

Clark said Seattle and King County could eventually go the way of California, which in recent months made the operations of Lyft, Sidecar and UBERx legal statewide. But that decision was made after the state issued cease-and-desist orders to the companies last fall while it figured out how to regulate them.

“Everything is on the table,” Clark said. “But I do not want to wrestle with this as long as they did in California.”

Alexa Vaughn: 206-464-2515 or

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