Uber Threatens To Cut Most Service In Minnesota If Minimum Pay Law Takes Effect


Uber has threatened to stop serving most of Minnesota and only offer higher-priced service in the Minneapolis-St. Paul if Gov. Tim Walz (D) signs legislation setting a new minimum pay rate for drivers — the latest in a series of efforts to boost wages for gig workers.

Key facts

Suggested legislationsent to Walz on Sunday after passing the House and Senate, would require digital ride-hailing companies like Uber and Lyft to pay drivers a $5 fee and at least $1.45 per mile—or $1.25 per miles outside of the Twin Cities area—because as well as $0.34 per minute for each time customers drive.

The bill would also create a process through which drivers could request a review if they believe they were wrongfully removed from their jobs.

If the bill is signed into law, Uber will stop providing service outside of the Minneapolis-St. Paul metro area, where it will offer only “premium products” — along with premium prices — starting Aug. 1, spokesman Freddy Goldstein said Forbesarguing that the proposal “will make it impossible to continue serving most areas of the state.”

Goldstein said the company has been trying to work with lawmakers for “several months” to create legislation that would allow “flexibility and benefits for drivers without compromising service for drivers,” but requests have gone unanswered.

Walz, a Minnesota reformer, has not committed to signing the bill registeredand when asked about the threats of rideshare companies to leave the country, he said that he takes them “seriously, but also somewhat skeptically”.

Forbes has reached out to Walz’s team for comment.

Key background

Minnesota’s bill is the latest in a series efforts across the country offer higher wages and more benefits to drivers and other workers in the economy. Similar efforts to guarantee a minimum wage for drivers have succeeded—namely in New York and Seattle—but both New York and Washington have laws that do not allow drivers to be considered employees, The New York Times registered. Uber and Lyft have argued that their drivers are not employees but rather independent contractors because of the flexible hours that come with their jobs. Proponents of stricter rules argue that rideshare companies underpay drivers and that even though drivers are considered independent contractors, the companies still have control over their work, making them more like employees who should enjoy benefits. President of the Minnesota Uber/Lyft Drivers Association said The Minnesota reformer said he couldn’t predict the future if Uber greatly reduced service in terms of jobs that would be lost, but argued the governor should sign the bill because “it’s the right thing to do.”

Crucial Quotes

Rep. Hodan Hassan (D), who sponsored the bill in the Senate, highlighted ua statement to the Star Tribune on Wednesday that similar changes have been made in other states. “We will not tolerate bad actors who take advantage of hard-working Minnesotans to line their corporate pockets,” she said. “If your business relies on keeping your workers in poverty, you don’t have a sustainable business model and you need to do better here in Minnesota.”


If the bill passes, Uber drivers in Minneapolis would earn more per mile than drivers anywhere else in the country, which Goldstein said is “completely out of step with the cost of living in Minneapolis and what drivers can afford.” Goldstein said Uber proposed a compromise of $1.17 per mile and $0.34 per minute, along with workers’ compensation insurance and a clarification that drivers are classified as independent contractors. She added that if possible, Uber’s “goal is to reach a compromise for the next session.”

Big number

50%. That’s how much Goldstein said the company estimates driving costs will increase for customers if the bill passes. She said this would in turn reduce demand by around 30%, causing drivers to actually take a pay cut instead of making more money.


Rideshare company Lyft also opposed the bill. The company told Axios that the rate increase will limit who can use the app and result in fewer rides. “Instead of pushing through legislation that would destroy services for the many communities that depend on it, we should continue to work together on a solution that benefits everyone,” the company told Axios in statement.

Further reading

Uber says operations outside the Twin Cities will end if the wage bill is signed into law (CBS)

Uber says it will shut down some services in Minnesota if the governor signs the new regulations (Minnesota Reformer)

Minnesota lawmakers battle Uber, Lyft over driver pay, protections (Axios Twin Cities)

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