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Minnesota passes bill seeking to ensure minimum wage for Gig workers

By Kellen Browning
Monday May 22, 2023

Omar Fateh, a Minnesota state senator who sponsored the minimum wage bill, celebrated with drivers from the Minnesota Uber/Lyft Drivers Association after the Senate vote.Credit...A.J. Olmscheid/Senate Media Services

The Minnesota Senate passed a bill on Sunday that would guarantee drivers for Uber and Lyft a minimum wage and other benefits, sending the measure to Gov. Tim Walz.

The narrow passage, a 35-32 vote after an earlier 69 to 61 approval from the state’s House of Representatives, capped a dramatic week of political maneuvering so the bill would clear the legislature before the session ends on Monday. Drivers for Uber and Lyft are known as gig workers because they are treated as independent contractors, meaning they are responsible for their own expenses and are not guaranteed a minimum wage, health care or other benefits.

If the legislation is signed by the governor, it will require Uber and Lyft to pay their drivers at least $1.45 per mile they drive a passenger — or $1.34 per mile outside the Minneapolis-St. Paul region — as well as $0.34 per minute. It also establishes an appeals process through which drivers can request a review if they feel they have been improperly deactivated from the platforms, and requires additional transparency around how drivers’ earnings are calculated.

Mr. Walz has called the bill “an important piece of legislation,” but has also said that more conversations need to happen before he commits to signing it.

The bill is a rare win for labor advocates in what has become a protracted, multistate battle over the rights of gig drivers and their status in the economy. Uber and Lyft have long argued that their drivers are independent contractors rather than employees. They say that drivers prefer being contractors because it allows them the flexibility to choose when they work, and many drivers work only part-time.

But labor advocates contend that drivers are exploited by the companies and are being misclassified as independent even though the ride-hailing services exert significant control over their work.

The federal government has largely avoided weighing in on the debate, and the U.S. Department of Labor has not sued or targeted Uber or Lyft for misclassifying workers. Instead, the issue has played out in state courts and legislatures and on ballot measures.

New York City and Seattle have passed laws guaranteeing minimum wages for gig drivers, while the companies have prevailed in getting their preferred rules on the books in California and the rest of Washington state. Both states enacted laws that guarantee drivers some benefits, like a minimum wage, but also preclude them from becoming employees. A similar, company-backed effort was thrown out by judges in Massachusetts last year.

Senator Omar Fateh, one of the bill’s authors, cheered its passage. “These workers deserve a livable wage to provide for themselves and their families.”

Mr. Fateh and gig drivers from the Minnesota Uber/Lyft Drivers Association, a group supporting the bill, celebrated outside the legislative chamber on Sunday.

Uber said it was disappointed by the bill’s passage. “For months, we have begged legislators to work with us on a compromise that raises rates for drivers without hurting riders, and for months our pleas were ignored,” Freddi Goldstein, a spokeswoman said, adding, “We hope Governor Walz will reject this bill.”

Uber and Lyft have argued that the bill raises wages too high, and that the deactivation appeals process would limit their ability to bar drivers who have been accused of misconduct.

The companies say the extra costs would be passed on to riders, forcing them to pay more, and they have instead proposed a guarantee of $1.17 per mile, as well as $0.34 per minute. Uber has said it could reduce service in Minnesota — a threat it has made in the past in other states. Lyft made a similar threat in a letter to the governor, and said on Sunday, “We ask that Governor Walz veto the bill and create a task force to properly study the best way to protect drivers while still safeguarding the affordability of the service.”

“If this bill were to pass, we would unfortunately have no choice but to greatly reduce service throughout the state, and possibly shut down operations entirely,” Uber said in a message to its Minnesota customers.

Lyft warned its customers that their fares could more than double if the bill is enacted, turning “ride share into an expensive luxury.”

Kellen Browning is a technology reporter in San Francisco, where he covers the gig economy, the video game industry and general tech news. @kellen_browning


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