Uber warns customers and drivers that it may leave Minnesota over proposed legislation

Uber is making a last-ditch effort to kill legislation on its way to becoming law in Minnesota, which the company says could cause it to shut down operations in the state completely.

In emails to drivers and customers on Monday night, Uber said the legislation would threaten passengers’ safety, drivers’ earning potential and the ability of the company to continue operating in the state. Included in the emails were links to email state lawmakers and urge them to oppose the bill. Lyft send a similar email to riders in April.

Lawmakers released another pared down version of the bill on Tuesday, but a lobbyist for Uber said the company believes it will still make rides more expensive than nearly anywhere else in the country.

The emails were the first direct messages the San Francisco-based tech giant sent to customers and riders since state lawmakers first introduced the bill (SF2319/HF2369) in late February.

The bill would guarantee Uber and Lyft drivers minimum pay rates and protections against being fired, or “deactivated.” It seemed unlikely to pass this year until Sen. Omar Fateh, DFL-Minneapolis, revived the effort last week and was able to get the bill back on track to reach the House and Senate floors before the end of the Legislative session.

Fateh said his bill has the support of legislative leaders and a commitment from Gov. Tim Walz to sign it. But Walz said he did not make a commitment to sign the bill — although he is supportive of its general aims — when asked by an Axios reporter during an unrelated news conference on Tuesday.

The legislation aims to provide some benefits to Uber and Lyft drivers, who as independent contractors, aren’t afforded the protections that employees have: minimum wage, overtime, Social Security, unemployment insurance and workers’ compensation. Uber and Lyft drivers also won’t be eligible for the various worker benefits the Legislature is poised to pass this year, including paid sick days and family leave.

Uber and Lyft drivers, who have recently organized themselves in Minnesota under a new association, have turned out in large numbers to committee hearings to show their support for the bill.

In the email to drivers, Uber said the legislation wouldn’t just reduce their earnings but leave them “vulnerable to becoming employees” rather than independent contractors.

Many drivers say they like the freedom and flexibility that being an independent contractor gives them. But they complain of having to shoulder more and more costs for gas, car payments and maintenance while the companies claim an increasingly larger share of every fare.

They say the bill would ensure some financial predictability as well as critical protections from the whims of giant corporations. Drivers say the companies aren’t transparent about compensation and some say they have been kicked off the platform without any explanation.

A spokeswoman for Uber says drivers do receive information on how much customers pay for each ride and drivers are always given a reason for deactivation.

A spokesman for Lyft said drivers receive a weekly earnings snapshot that says how much riders paid in total that week. The Lyft spokesman said drivers have the option of appealing deactivation decisions.

Uber told drivers it has proposed a compromise bill, which would guarantee a pay rate of $1.15 per mile and $0.25 per minute while a passenger is in the vehicle.

The bill’s author in house, Rep. Hodan Hassan, DFL-Minneapolis, offered a new version of the bill on Tuesday with substantially reduced minimum pay rates. Under that version, drivers would be entitled to a $5 minimum fee plus at least $1.45 per mile and $0.34 per minute in the seven-county Twin Cities metropolitan area. Outside of the metro area, the minimum rate would be $1.25 per mile and $0.34 per minute.

That’s down from the original version, which required transportation network companies to pay drivers a minimum fee of $6.50 per ride plus $2.55 per mile and $0.65 per minute.

In Washington state, where lawmakers have already set minimum rates, drivers are entitled to $1.27 per mile and $0.37 cents per minute.

In the email to riders, Uber said the legislation would limit their ability to keep dangerous drivers off the platform, including drivers accused of sexual assault, harassment, impaired driving and discrimination.

That’s in reference to a provision in the bill that aims to protect drivers against being unfairly deactivated. The bill would require transportation network companies to have clear rules around discipline and provide drivers with a written account of why they’re being sanctioned or deactivated.

A version of the bill passed by the Senate judiciary committee last week said drivers must have the opportunity to present their side of the story and appeal the companies’ decisions before being deactivated or disciplined, although companies would still be allowed to temporarily ban drivers for major infractions that endanger public safety.

The bill no longer says that companies may not kick off drivers before a hearing. Drivers would still have the right to a hearing, however, within 15 days of receiving a notice of deactivation.

The bill also requires companies to hold reinstatement hearings for all drivers who were deactivated since 2021.

Uber says the requirements are too burdensome and could require them to track down victims of sexual assault or other harassment to have them testify hearings.

A third sticking point in negotiations was a requirement that companies like Uber and Lyft provide additional insurance. That requirement is no longer in the bill. At one point, the bill would have required the company insure drivers up to $1 million in medical costs, which a lobbyist for Uber said isn’t currently offered by any insurance company.

Eid Ali, president of the newly formed Minnesota Uber/Lyft Driver Association, said the insurance provision was one of the most important aspects of the bill for drivers because many have been injured or attacked on the job. As independent contractors, they have to cover their own medical expenses and don’t receive disability pay while they’re recovering.

“It’s unfortunate,” Ali said.

He said they knew they wouldn’t get everything they wanted and are considering coming back next year to build on their momentum if it passes.

The bill is scheduled to be heard on the House floor on Wednesday.