Bill regulating Uber and Lyft could hold up the rest of the legislative agenda in Minnesota

Standing outside the Capitol on Wednesday morning, Sen. Omar Fateh, DFL-Minneapolis, made a promise to a cheering crowd of Uber and Lyft drivers.

“My commitment to you is that this will get across the finish line. It will pass the judiciary committee. It will pass on the floor of the Senate. It will pass on the floor of the House … and I’ve gotten a commitment from the governor’s office also that if this bill passes he will sign it,” Fateh said.

The bill (SF2319/HF2369) would guarantee Uber and Lyft drivers significant wage increases, better insurance coverage and protections against being fired, or “deactivated.”

Fateh was flanked by three of his Democratic colleagues in the House: Reps. Mohamud Noor and Hodan Hassan of Minneapolis and Samakab Hussein of St. Paul. Sen. Zaynab Mohamed, while not present, is just as committed to the bill, they said.

Fateh and his colleagues have significant leverage. With a one seat majority in the Senate, Democrats have to vote in unison on every bill to overcome Republican opposition, which means every Democratic senator has significant influence. In the House, Democrats can afford to lose just two votes from their ranks and still pass a bill.

The legislative session ends in less than two weeks, and lawmakers still need to pass most of a two-year budget that funds everything from schools to road construction to homeless shelters to health care services. The handful of lawmakers who’ve formed an unofficial rideshare driver caucus hope to capitalize on their party’s slim majorities and the quickening calendar, using their considerable influence to nudge their priorities into law.

The Uber and Lyft bill was revived with a hearing for a new version of the bill in the Senate judiciary committee on Wednesday, after it was dormant for weeks.

The new version has significantly lower minimum rates and benefits for drivers, but Uber and Lyft say it would still lead to exorbitant price increases that would crush demand and jobs along with it. The companies also say the bill could force them to reinstate unsafe drivers.

“This has public safety problems, it has cost problems … I’m not going to ask you to vote no … because I understand the dynamic that you’re faced with, but you need to know the implications of this,” Joel Carlson, a lobbyist for Uber, told the judiciary committee.

Fateh and Hussein declined to say if they would hold up large budget bills to get the Uber and Lyft regulations passed.

Standing outside the Capitol, Noor said he was supporting Omar and Hassan, the author of the bill in the House, and they would do “whatever it takes to get this thing done.”

Hassan said she couldn’t comment, and then Fateh rushed up and told her not to talk to a Reformer reporter.

Drivers packed the committee room to hear Fateh present the latest version of the bill, while legislative staff worked on a last-minute amendment, which was printed out for lawmakers minutes before they had to adjourn. The committee will reconvene for more discussion on Wednesday afternoon.

Fateh told the committee the bill has changed significantly through conversations with the companies and drivers, though he acknowledged that neither side is satisfied with the latest version of the bill.

“When there’s a compromise, both sides are not going to be happy with the result,” Fateh told the committee. “The alternative to this is doing nothing. And doing nothing means the drivers continue on the path that they’re on and for a lot of folks this is their sole source of income.”

The committee’s chair, Sen. Ron Latz, DFL-St. Louis Park, expressed frustration during the hearing that the bill still does not have the full support of either Uber and Lyft drivers or the companies about any of the provisions in the bill. Asked after the hearing if Fateh had issued a budget-related ultimatum that forced Latz to take up the bill, he replied: “That dynamic is above my paygrade.”

House Majority Leader Jamie Long, DFL-Minneapolis, said he knows there’s “a real desire to try to find a path forward.”

Uber says the average cost of a ride between Minneapolis and St. Paul would rise to about $50 under the bill’s rules. The company also said there isn’t insurance available for them to buy that would meet the bill’s requirements.

Drivers are adamant about gaining greater protections, saying they have borne the costs of high gas prices and inflation while massive corporations gobble up more and more of each fare — more than 60% by their estimates.

Drivers also complain that they can be fired for any reason and have little protection against unruly passengers — some have even been brutally assaulted and forced to pay for their own medical costs and lost wages while they recovered.

Hundreds of drivers have organized under a new advocacy group, the Minnesota Uber/Lyft Drivers Association, to push for regulations at the local and state levels.

Uber, Lyft and other popular apps like DoorDash classify their workers as independent contractors rather than employees, which exempts the companies from having to pay a minimum wage, overtime, Social Security, unemployment insurance and workers’ compensation.

By classifying drivers as independent contractors, Uber and Lyft also shift the cost of purchasing and maintaining a vehicle, gas and insurance onto drivers. The companies say the model allows drivers freedom and flexibility in their work that they wouldn’t be afforded as employees.

California has challenged the independent contractor status of drivers, though that’s been mired in legal battles for years.

Washington state has pursued a middle ground — which has inspired the proposal in Minnesota — setting minimum standards and pay for Uber and Lyft drivers without touching the issue of employment status.

Under the latest version of the bill, Uber and Lyft would be required to provide insurance for drivers that would cover up to $1 million for medical costs and expenses, $500,000 for disability and 75% of lost wages. The companies’ policies would have to cover drivers whenever they are logged into the network, which Uber and Lyft say is ripe for exploitation since drivers may stay logged in while driving but not accept rides.

The bill sets minimum compensation rates of at least $1.85 per mile and $0.25 per minute while drivers are transporting passengers and $1.25 per mile and $0.10 per minute to pick up a rider if they are more than five miles away. The fares and fees would also be tied to inflation.

That means a driver would earn at least $22.25 on a 10-mile, 15-minute ride between Minneapolis and St. Paul. What consumers would pay would likely be significantly higher and may even exceed taxi cab rates in order to cover Uber and Lyft’s fees and the insurance provided to drivers.

Fateh said the rates drivers received years ago were higher than the minimum rates proposed in the bill, which Uber denies.

Depending on the type of trip, Washington’s minimum rates are slightly lower — at $1.27 per mile and $0.37 per minute — despite having a significantly higher cost of living. The state also does not require the companies to pay for drivers to pick up passengers.

The minimum rates in the new version are significantly lower than what drivers and their allies at the Capitol initially proposed, which would have entitled drivers to around $40 for a trip between Minneapolis and St. Paul. The previous version also required companies like Uber and Lyft to pay drivers for fuel and maintenance expenses, which could have run afoul of state law governing independent contractors.

As independent contractors, Uber and Lyft drivers aren’t eligible for mandated sick and safe time, paid family and medical leave, or workers’ compensation.

The latest version of the bill requires transportation network companies to have “clear written rules” under which a driver can be deactivated and must explain to drivers why they are being deactivated or sanctioned.

Drivers would have the right to present their positions and appeal the companies’ decisions prior to being deactivated, except for major infractions that endanger public safety.

A representative for Uber said the bill as written could require them to force people who have been assaulted by drivers to testify about the abuse in order for the company to remove problem drivers from the app.

The bill would require Uber and Lyft to retroactively reinstate drivers who have been fired in the last four years, which could include those accused of assault. The companies say they would struggle to keep the drivers off the app unless they were able to find victims to testify against the drivers.

“You’re talking about situations where we probably don’t even have records anymore,” Carlson, the Uber lobbyist, told the committee.