Minnesota Legislature approves minimum wage for Uber and Lyft drivers
Uber and Lyft drivers lift Sen. Omar Fateh, DFL-Minneapolis, on their shoulders after a bill passed on May 21, 2023 setting minimum pay rates for drivers. Photo by A.J. Olmscheid/Senate Media Services.
The Minnesota Senate passed a bill on Sunday that would set minimum pay rates for Uber and Lyft drivers and establish greater protections against wrongful termination – or “deactivation.”
“Minnesota has long been a leader in protecting workers from being exploited and taken advantage of, but in the area of (transportation network companies) Minnesota is lagging behind,” the bill’s chief author, Sen. Omar Fateh, DFL-Minneapolis, said on the Senate floor.
As independent contractors, Uber and Lyft drivers aren’t entitled to the benefits afforded employees such as minimum wage, overtime pay, Social Security and workers’ compensation insurance.
The Senate and House passed the bill (HF2369) in the final days of the legislative session despite warnings from the companies that the regulations could cause prices to double and demand to plummet. Uber said it might even shut down operations in the state completely.
Gov. Tim Walz has been decidedly non-committal about signing the bill, saying just a few hours before the Senate vote that “there’s a long ways to go yet.”
“This is an economy that needs to be looked at,” Walz said. “(The executive branch is) responsible for the implementation, so we have questions on a lot of areas that need to be answered before things come to us.”
If the bill becomes law, Minnesota would follow Washington state and New York City in setting minimum pay rates — places where Uber and Lyft are both still active, the bill’s proponents note.
The bill’s passage comes after a rocky two weeks, during which Fateh revived the bill and made significant changes, including scrapping an insurance requirement the companies said was unworkable.
The bill passed 35-32, picking up the support of one Republican senator, Jim Abeler of Anoka. After the vote, Uber and Lyft drivers lifted Fateh on their shoulders in celebration inside the Capitol, where they had been demonstrating for days.
U.S. Rep. Ilhan Omar visited the Capitol on Sunday to lend her support to Uber and Lyft drivers. Omar addressed the drivers in Somali and English while donning a white shirt reading “MULDA” — for the Minneapolis Uber/Lyft Drivers Association, an advocacy group recently created by drivers.
“I strongly urge the governor to not stand in the way of the passage of this bill and get ready to sign this bill and support those who supported him,” Omar told the drivers just outside the governor’s office.
Uber and Lyft both blasted the bill and urged Walz to issue his first ever veto in more than four years in office.
“For months, we have begged legislators to work with us on a compromise that raises rates for drivers without hurting riders, and for months our pleas were ignored,” said a statement from Uber. “Unfortunately, what we’re left with is a bill rushed through in the final hours that will leave hundreds of low-income and disabled riders stranded and thousands of drivers without work.”
The bill requires transportation network companies, including Uber and Lyft, to pay drivers a $5 minimum fee plus $1.45 per mile and $0.34 per minute in the seven-county Twin Cities metropolitan area. Drivers in greater Minnesota would be entitled to $1.25 per mile and $0.34 per minute. The minimum rates would increase with inflation.
Drivers would also be entitled to 80% of cancellation fees if they have already departed to pick up a rider as well as $1.25 per mile and $0.10 per minute if the companies charge customers for a “long pick up.”
The rates in Minnesota’s bill for the Twin Cities metro area are slightly higher than those mandated by Washington state, which is $1.27 per mile and $0.37 per minute. Seattle’s rates — $1.50 per mile and $0.64 per minute — are only slightly higher than the Twin Cities despite having a significantly higher cost of living.
The proposed minimum rates in the bill have been cut nearly in half since Fateh first introduced the bill in February. Under those rates, a driver would receive roughly $40 for a 10-mile, 15-minute trip between Minneapolis and St. Paul. That doesn’t include the fees Uber and Lyft would collect for themselves.
The bill also originally required the companies to pay drivers for gas, wear and tear on vehicles and additional insurance. The companies said those provisions were unworkable since independent contractors are not legally allowed to be reimbursed for their costs, and there isn’t insurance available that would meet the previous requirements of the bill.
The bill passed by the Legislature also includes protections for drivers against wrongful deactivation. Drivers complain that the company can kick them off the app for any reason, leaving them with a large car payment and no recourse to get their jobs back.
Transportation network companies would be required to have clear written rules stating the circumstances under which a driver may be deactivated or sanctioned. Companies must provide drivers with a written explanation for any proposed deactivation or sanction, and drivers would have the right to appeal those decisions.
The companies say those rules could force them to find victims of assault or other serious misconduct to testify in order to keep problem drivers off the platform. The companies also take issue with the bill’s provision requiring them to allow former drivers to challenge deactivations going back to 2021.
Drivers convicted of serious crimes such as murder, felony stalking, or possessing child pornography must be permanently deactivated from the apps, under amendments to the bill written by House Republicans. Uber and Lyft say those crimes would already disqualify someone from becoming a driver for them.
The new pay standards and termination protections add to Democrats’ lengthy list of worker-friendly bills passed this year, including mandatory paid sick leave. But Uber and Lyft drivers, as independent contractors, won’t be eligible for paid sick leave. They will be able to access paid family and medical leave if they opt into the program and pay for the premiums themselves.
The door is still open for drivers to unionize and challenge their status as independent contractors, although many say they prefer being independent contractors over employees.
The bill explicitly states it doesn’t affect any law regarding independent contractors or whether a transportation network company is an employer of a driver.
*This story has been corrected to reflect that independent contractors may buy into the proposed paid family and medical leave program.
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