Lyft and Uber threaten to cut service in Minneapolis over proposed minimum wage

By: - August 15, 2023 1:56 pm

Evening rush hour in Minneapolis. Getty Images.

Lyft says it will stop service in Minneapolis if the City Council passes an ordinance they’re scheduled to vote on this week. The new law would set minimum pay rates for Lyft and Uber drivers as well as establish new standards on discipline and termination.

In a letter to City Council President Andrea Jenkins on Tuesday, a Lyft executive said the company supports minimum wages for drivers, but that the rates proposed in Minneapolis are too high and would ultimately lead demand to plummet.

“The proposal before you is bad for drivers, bad for riders, and inoperable,” Lyft’s Chief Policy Officer Jeremy Bird wrote. “It could turn rideshare into a luxury service, despite the fact that most Lyft riders in Minnesota have an annual household income approximately 17% below the state median.”

Lyft also sent a warning to riders saying it would shut down operations in the city and urged riders to send emails to their council members.

Uber sent a notice to riders on Monday warning them that the ordinance would leave them “no choice but to greatly reduce service” and could shut down operations completely. An Uber spokesperson said the company plans to only provide luxury services.

The threats are just the latest salvo in what has become a tough political battle that started at the Legislature last spring, when DFL lawmakers passed a bill raising driver wages. Uber threatened to cut off most service in Minnesota, and Gov. Tim Walz issued his first and only veto of the bill.

The City Council is scheduled to vote Thursday on the ordinance, which would set minimum pay rates at $1.40 per mile and 51 cents per minute — which would increase with inflation — and at least $5 per ride.

Drivers say they currently earn around 58 cents per mile and 14 cents per minute on average. The rates for each trip can vary greatly with no explanation, which is a source of constant frustration for drivers.

The city ordinance, which would take effect Jan. 1, would also set new rules on how the companies may discipline and terminate — or “deactivate” — drivers. Drivers say the companies will kick them off the apps with no recourse, leaving them saddled with debt for cars they purchased to drive for the companies.

Jenkins and two of the ordinance’s authors — Council Members Robin Wonsley and Jason Chavez — did not immediately respond to messages seeking comment. Council Member Jamal Osman declined to comment through an assistant. A spokesperson for Mayor Jacob Frey said he supports higher wages for drivers but was still reviewing the ordinance.

In an Op-Ed published this week in the Star Tribune, the ordinance’s authors said the warnings from Uber and Lyft are exaggerated and part of their playbook to kill unfriendly regulations.

“Multibillion-dollar corporations like Uber and Lyft have lobbyists and PR departments who drum up fears that basic workers’ rights will cause the sky to fall,” Wonsley, Chavez and Osman wrote.

The companies say the proposed Minneapolis ordinance would jeopardize riders’ safety by making it impossible for them to keep off dangerous drivers.

The ordinance requires transportation network companies to provide drivers with five days of advance warning before all deactivations. Drivers would be able to request a reconsideration meeting, which would have to happen within a week, otherwise the companies would have to reinstate the drivers.

For a deactivation to be upheld, the companies would have to show that it is more likely than not that a violation occurred. The ordinance also requires the companies to reconsider deactivations going back to 2021.

In Lyft’s letter to Jenkins, the company said it would have to reach out to victims of violence or sexual abuse going back three years.

After vetoing the Uber bill, Walz created a task force made up of drivers, company representatives and other stakeholders to propose legislation next year. The state Legislature is poised to pass a bill that could preempt the city law in a matter of months.


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Max Nesterak
Max Nesterak

Max Nesterak is the deputy editor of the Reformer and reports on labor and housing. Previously, he was an associate producer for Minnesota Public Radio after a stint at NPR. He also co-founded the Behavioral Scientist and was a Fulbright Scholar to Berlin, Germany.