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Uber and Lyft have proved that ultimatums really do work, by threatening to end services in Minneapolis in response to a proposed city ordinance that would have established a minimum wage for local rideshare drivers.
On Tuesday, Minneapolis Mayor Jacob Frey vetoed the proposal—which sought to establish a base pay of $1.40 per mile and 51 cents per minute, with a minimum of $5 per ride—over concerns about its potential impact on fair pay, safety, and ridesharing’s future in the city. Instead, Frey said he negotiated a deal with Uber directly to guarantee that drivers receive Minneapolis’s minimum wage and a minimum of $5 per trip.
- This is the second time the issue has come up in Minnesota this year. In May, Governor Tim Walz blocked a bill, which narrowly passed the Minnesota Senate, that attempted to establish base pay for drivers statewide.
Zoom out: Minneapolis isn’t the first city to push for expanded gig worker protections. Seattle’s City Council established a minimum wage for drivers back in 2020, following the lead of New York City, which did so in 2018.
Elsewhere, rideshare platforms have had some success in staving off such efforts: After a long legal tussle over a ballot measure funded by companies including Uber, Lyft, and DoorDash, a California state court ultimately ruled the platforms can classify drivers as independent contractors. Proposition 22, which California voters approved in 2020, exempts gig workers from the state’s strict worker status test known as AB5. The March 2023 decision to uphold Proposition 22 was something of a split win for companies, however, as courts tossed out a section that limited lawmakers’ ability to amend the rule, such as by allowing drivers to unionize.
More to come at the federal level: Last year, the Department of Labor proposed a new rule for determining who is an independent contractor and who must be classified as an employee and therefore given protections under the Fair Labor Standards Act. That controversial proposal—for which a final rule is expected in October—would make it harder for companies to classify workers as independent contractors.—MA