Ride-hailing companies Uber and Lyft said Monday they will keep operating in Minnesota now that state lawmakers have passed a measure that will increase driver pay, but at a lower rate than approved by Minneapolis officials earlier this year.
Although the new pay minimums are less than the rate approved by the Minneapolis City Council in March, they are intended to ensure drivers across the state are paid at least the city’s minimum wage equivalent of $15.57 an hour, though they also might mean increased costs for passengers.
Minnesota lawmakers approved the pay plan Sunday night, on the last day of the legislative session and sent the measure to Gov. Tim Walz, who has said he will sign the bill into law. The deal resolves months of uncertainty after the higher rate approved by the Minneapolis council prompted Uber and Lyft to say they would leave not only Minneapolis but the entire state.
“I am so, so, so overwhelmingly happy,” said Eid Ali, president of the Minnesota Uber/Lyft Drivers Association, a group of hundreds of drivers who have been advocating at city and state levels for higher pay since June 2022. “It’s an amazing victory for drivers.”
The new compromise requires ride-hailing companies to pay drivers a minimum of $1.28 per mile and $0.31 per minute while transporting riders anywhere in the state, starting Dec. 1.
That means a ride lasting 10 miles and 15 minutes would result in the driver being paid a minimum of $17.45, not accounting for expenses like gas or wear-and-tear of the vehicle. Drivers also spend time waiting for riders to request rides but aren’t compensated for that.
Although he supports the legislation, Ali said he’s disappointed the statewide measure will override the more generous Minneapolis measure. That plan required companies to pay drivers at least $1.40 per mile and $0.51 per minute for the time spent transporting a rider within Minneapolis — that same 10 mile ride would have paid the driver $21.65.
Uber and Lyft said that rate was too high and threatened to leave the state if the Minneapolis council-backed rates were implemented.
Uber spokesperson Josh Gold said Monday that the new rate approved by the Legislature “will allow us to continue to operate” in the city and throughout the state. Gold said the compromise was “hard-fought and brokered by the governor.” He said he expects prices to increase for riders, but didn’t say by how much.
Lyft spokesperson CJ Macklin said in a statement, “we have found enough common ground to balance a new pay increase for drivers with what riders can afford to pay and preserve the service. We look forward to continuing to serve both riders and drivers across the state for the foreseeable future.”
A recent study commissioned by the Minnesota Department of Labor and Industry found that, after factoring in expenses, 50% of Uber and Lyft drivers in the Twin Cities metro area earned $13.63 per hour or less while driving. In the rest of Minnesota, 50% of Uber and Lyft drivers earned $8.12 per hour or less.
Supporters of the original Minneapolis measure had said the city’s rate would ensure that companies pay drivers the equivalent of the city’s minimum wage of $15.57 per hour. However, the study found that a lower rate of $0.89 per mile and $0.49 per minute would meet the $15.57 per hour goal.
Minneapolis Council Member Robin Wonsley, lead author of the city’s measure, said in a statement: “I am deeply disappointed that our Governor acquiesced to Uber and Lyft’s demand of preemption, stripping Minneapolis of our regulatory authority in order to appease the profit-driven interests of Uber and Lyft.”
She added, “Had drivers not organized at the local level, and Minneapolis City Council not passed our strong rideshare policy in March, there would be no statewide policy to celebrate today.”
Gold, the Uber spokesperson, said Minnesota is the first state to establish statewide minimum pay for drivers. Washington state has also set minimum pay, but requires a different rate in Seattle, Gold said.
Minnesota Democratic Sen. Omar Fateh, who championed the state’s driver pay bill, posted on social media: “We got it done, passing the strongest rideshare driver protections in the nation and a 20% wage increase. Proud of @TheMulda (the Minnesota Uber/Lyft Drivers Association) for their tireless efforts.”
Uber and Lyft previously pulled out of Austin, Texas, in 2016, after the city pushed for fingerprint-based background checks of drivers as a rider safety measure. The companies returned after the Texas Legislature overrode the local measure and passed a law implementing different rules statewide.