Uber, Lyft Walk Back Threats to Leave Minneapolis as State Passes New Minimum Wage For Drivers

Uber, Lyft Walk Back Threats to Leave Minneapolis as State Passes New Minimum Wage For Drivers

Minnesota legislators reached a compromise with Uber and Lyft to increase pay for drivers across the state through a newly passed bill on Sunday, according to the Star Tribune. The ridesharing companies say they will continue operating throughout the state, after threatening to leave Minneapolis in August when the city council passed even higher minimum pay standards that Uber called “incredibly expensive.”

“The rate increase passed by the State is 57% less than the now preempted City ordinance and while the coming price increases may hurt riders and drivers alike, we will be able to continue to operate across the State under the compromise brokered by the Governor,” Uber spokesperson Josh Gold said in an emailed statement to Gizmodo.

The bill, which is headed to Governor Tim Walz’s desk where he’s indicated he will sign it into law, will supersede the minimum pay standard that Minneapolis’ city council passed in August. That ordinance, which Uber and Lyft threatened to leave over, would’ve forced the companies to pay Minneapolis drivers $1.40 per mile and $0.51 per minute during rides. The new statewide law sets minimum rates at $1.28 per mile and $0.31 per minute. Ultimately, this law will result in a 20% wage increase and stronger protections for drivers, according to a tweet from Minnesota Senator Omar Fateh, who sponsored the bill.

“It was Uber and Lyft versus MULDA (Minnesota Uber/Lyft Drivers Association) and MULDA won,” Fateh said to supporters after the bill passed and then was hoisted into the air by the group.

Starting Jan. 1, 2025, the bill ensures Minneapolis drivers will earn the city’s minimum wage of $15.75 after accounting for vehicle expenses and taxes, according to the Minnesota Reformer. The bill also provides increased insurance coverage for drivers injured on the job and protection against unfair account deactivation.

“Through direct engagement with all stakeholders, 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,” a Lyft spokesperson said in an emailed statement.

Lyft and Uber maintain they’ve both supported a minimum pay standard for years, but have argued that Minneapolis’ previous pay increase ordinance was too much. The rideshare companies said the costs would have to be transferred onto customers, and would negatively affect riders and drivers.

It’s a familiar argument from Uber and Lyft. When New York delivery drivers won a similar wage increase in late 2023, Bloomberg reported that Uber and DoorDash responded by adding fees for customers. This resulted in higher earnings for drivers, but the companies also made tipping harder, so as not to overwhelm customers. Wage increases for gig workers are hard-fought and rarely won, so many Minnesota drivers are viewing this as a success.

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