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Uber and Lyft agree to deal with state lawmakers on minimum pay rates for drivers


Uber and Lyft agree to deal with state lawmakers on minimum pay rates for drivers

May 18, 2024 | 11:59 pm ET
By Max Nesterak
Uber and Lyft agree to deal with state lawmakers on minimum pay rates for drivers
Sen. Omar Fateh, DFL-Minneapolis, and Rep. Hodan Hassan, DFL-Minneapolis, celebrate a deal on minimum pay and labor standards for Uber and Lyft drivers at a news conference with Democratic lawmakers on May 18, 2024. Photo by Max Nesterak/Minnesota Reformer.

Uber and Lyft reached a deal with lawmakers on Saturday night that will raise pay for drivers across the state while preempting Minneapolis and other cities from enacting their own wage floors.

The deal comes more than 18 months after drivers with a then-new group called the Minnesota Uber/Lyft Drivers Association first held a news conference in the state Capitol with Democratic lawmakers, who pledged to address drivers’ longstanding complaints about wages and workplace protections.

Since then, lawmakers, driver activists and the companies have been engaged in contentious negotiations with multiple threats by the companies to leave Minnesota. A version of the bill was vetoed last year by Gov. Tim Walz, the only of his tenure, prolonging negotiations through a state task force over the past year.

With just hours left in the legislative session this year, it was unclear if Democrats could deliver a compromise bill for drivers that both raised their pay and kept Uber and Lyft operational in the state.

But on Saturday night, Democratic legislators and Walz packed into the press room at the Capitol to celebrate the agreement, while some Republican lawmakers sat by in the audience.

“This damn bill,” said bill author Sen. Omar Fateh, DFL-Minneapolis, tearing up at a news conference on Saturday night.

Democratic lawmakers heralded the agreement as the strongest labor protections for ride-hail drivers in the nation: raising wages for drivers by 20%, increasing insurance coverage for drivers injured on the job and providing protections against unfair deactivation.

Starting Jan. 1, 2025, the bill will entitle drivers to at least $1.28 per mile and 31 cents per minute, which is within the general range of rates needed to ensure Twin Cities drivers earn the Minneapolis minimum wage of $15.57 per hour after accounting for their vehicle expenses and payroll taxes, according to a state study of driver compensation.

In a statement released on Sunday morning, Uber spokesman Josh Gold said the rates and insurance requirements would lead to price increases that “may hurt riders and drivers” but the company would continue operating in the state under the compromise brokered by Walz.

Walz praised Fateh at the news conference for “not wavering an inch since last year.”

The comment was a nod to Fateh leveraging his effective veto in the Senate, where Democrats have just a one-seat majority, to hold up the rest of Democrats’ agenda until a deal on a ride-hail bill was reached. Omar was absent for a floor vote on Saturday morning, and the Senate was only able to pass one bipartisan bill increasing funding for emergency medical services.

Asked if he gave his caucus an ultimatum, Fateh said, “We were working together.”

The state agreement preempts cities from enacting their own standards that are already covered in the bill, which includes wages, deactivations, pay transparency and insurance requirements. Cities may still choose to license transportation network companies and charge fees.

Preempting local governments from enacting their own standards was one of the biggest sticking points besides the pay rates.

Democrats were leery of overriding local control of labor standards, but Uber and Lyft said they would leave Minneapolis (and the entire Twin Cities metro, in Uber’s case) if the higher rates passed by the Minneapolis City Council took effect as scheduled on July 1.

Minneapolis Council Vice President Aisha Chughtai blasted the provision of the bill on X, writing, “Any and all attempts to undermine local control are bad. It’s a Republican and corporate tactic used around the country. Watching our Gov. Tim Walz cave to multibillion-dollar corporations in insisting on preempting Minneapolis is gross.”

House Majority Leader Jamie Long, DFL-Minneapolis, said it was the best bill they could get for drivers and praised the council for their work passing an ordinance setting minimum pay – even though it will never take effect.

“I think they can hold their heads high knowing that they forced the conversation here,” Long said.

In addition to the agreement on wages and labor standards, the House Ways and Means Committee passed a last-minute bill on Saturday morning to appropriate $2 million from the workforce development fund to create a new 0% interest car loan program for ride-hail drivers. Drivers who have been working for at least a year on ride-hail platforms and have a household income less than $80,000 would be able to borrow $15,000 for regular vehicles and $20,000 for wheelchair-accessible vehicles.

The bill directs the Department of Employment and Economic Development to award grants to community development financial institutions or similar nonprofit organizations to administer the loans and keep up to 10% for administrative costs.

Read more about what’s in the bill here.