Minneapolis mayor vetoes minimum wage ordinance for Uber and Lyft drivers

By: - August 22, 2023 5:36 pm

Minneapolis City Hall. Photo by Max Nesterak/Minnesota Reformer.

Uber and Lyft drivers pushing for higher wages and greater protections from unfair terminations suffered their second legislative defeat in three months on Tuesday, after Minneapolis Mayor Jacob Frey vetoed an ordinance regulating both companies.

In May, Gov. Tim Walz vetoed a similar bill passed by the Legislature, saying he supported higher wages for drivers but that “this is not the right bill.” Instead, the governor created a task force to make recommendations for legislation next year.

Frey said he met with representatives for drivers, the companies, unions and disability advocates and determined the ordinance wasn’t thought through enough. He said he would meet with more stakeholders in the coming weeks to develop an ordinance he could support.

“I think it deserves more time,” Frey said. “Do I have all the answers? No. But I know it wasn’t ready.”

A divided City Council voted 7-5 last week in favor of the ordinance, while nine votes are needed to override a mayoral veto.

As a consolation, Frey said he reached an agreement with Uber — but not Lyft — to ensure that all drivers make at least the city’s minimum wage of $15.19 per hour for large companies, effective immediately.

Uber drivers in the Twin Cities earn a median $32 per utilized hour — the time between accepting a fare and dropping off a passenger — according to spokeswoman Freddi Goldstein. Lyft says Minneapolis drivers earn more than $37 per utilized hour on average including tips and bonuses.

Still, the agreement will lift wages for some drivers, Goldstein said.

If drivers earn less than $15.19 per hour on average over the course of two weeks, Uber will pay drivers the difference. The company also said recently it would guarantee that no driver earns less than $5 per ride.

Drivers who filled City Hall and the state Capitol have balked at the figures provided by the companies, saying they earn less than minimum wage.

Eid Ali, president of the Minnesota Uber/Lyft Drivers Association, said $15.19 an hour isn’t a fair wage considering drivers must also pay for their own cars, gas and maintenance. He said the mayor’s veto was “devastating for many folks” but that they would continue fighting for minimum pay rates. Ali currently serves on the governor’s task force on pay for Uber and Lyft drivers.

City Council Member Robin Wonsley, the lead author of the ordinance, blasted the mayor for the veto, saying in a statement that he “caved to corporate lobbying” and “betrayed rideshare drivers.”

The ordinance would have set minimum pay rates at $1.40 per mile and 51 cents per minute — which would increase with inflation. Drivers say their earnings have declined over the years to less than 60 cents per mile and 14 cents per minute on average.

Under the ordinance, companies would have to give drivers five days’ notice of a proposed deactivation or sanction and the opportunity to present their response within seven days.

The ordinance also said the city may contract with a nonprofit “driver resource center” to represent drivers in disputes with the two companies and educate them about their rights. Frey said he believed working with a driver resource center is an initiative better left to the state.

Uber and Lyft fiercely opposed both efforts at the state Capitol and Minneapolis City Hall, saying the proposals would lead prices to double or more, which would cause demand to plummet. Both companies said they would cut services or pull out completely if either proposal became law.

A spokesperson for Lyft did not say if the company would also guarantee drivers a minimum wage but shared a statement celebrating the veto.

“By attempting to jam through this deeply flawed bill in less than a month, it threatened rideshare operating within the city. We support a minimum earning standard for drivers, but it should be part of a broader policy framework that balances the needs of riders and drivers,” the statement said.

Some drivers feared that if the companies made good on their threats, driver earnings could decrease. They hoped to negotiate a compromise with Uber and Lyft.

Frey said he “can’t predict the future,” when asked if he believed if Uber and Lyft would have pulled out of Minneapolis or if those threats influenced his decision.

The companies also warned that the regulations of deactivations, which would require them to review years-old terminations, would force them to search for victims of abuse to come forward or else reinstate dangerous drivers.

Drivers say they can be kicked off the platforms with little explanation or recourse, leaving them saddled with debt for cars they can no longer use to earn money.

Frey said he believes the city will be able to work faster than the state in rolling out regulations for Uber and Lyft. The state could ultimately end up overriding any city ordinance, however.

Ahead of the council vote, Frey hinted he would veto the ordinance and sent a letter to the City Council urging them to take more time.

Council Member Andrew Johnson suggested the ordinance be sent back to committee, pointing out that if the mayor vetoed the ordinance, they would have to start the process over again — ultimately delaying the effort to guarantee minimum pay rates and protections to drivers.

In a statement, Frey said he would start the process for a new ordinance in the next couple weeks and will seek input from drivers, labor unions, businesses, disability advocates and others.

The statement from Frey’s office included comment from the five council members who voted against the ordinance — Linea Palmisano, Emily Koski, Johnson, Michael Rainville and LaTrisha Vetaw — plus Lisa Goodman, who was absent for the vote.

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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.