Uber, Lyft Drivers Set for Pay Raise After Minnesota Bill Passes

Minnesota is poised to mandate pay raises for drivers at Uber Technologies Inc. and Lyft Inc., preempting a Minneapolis measure that would have required even higher pay and had prompted threats from the companies to leave that city.

The measure (HF 5242), which Gov. Tim Walz (DFL) has said he will sign, will make Minnesota only the second state to regulate the pay of rideshare drivers via legislation, following Washington’s 2022 law. New York state’s attorney general announced minimum pay rates for drivers as part of a legal settlement with Lyft and Uber in November.

Like the New York settlement, the Minnesota bill doesn’t specifically address drivers’ classification as either independent contractors or employees. Rideshare companies consider their drivers to be independent contractors, which means they don’t qualify for various legal protections and benefits including minimum wage, overtime pay, unemployment insurance, worker’s compensation, and paid sick leave.

State lawmakers passed the compromise proposal as part of a broader bill late Sunday night, guaranteeing rideshare drivers at least $1.28 per mile and $0.31 per minute for time spent transporting a passenger. It will provide an estimated 20% raise in average pay for drivers, according to the governor’s office.

Uber spokesman Josh Gold said the company plans to continue operating in Minnesota, but expects to raise prices. Lyft spokesman CJ Macklin said Lyft also plans to keep doing business in the state.

Walz said on social media May 18, after he and lawmakers had agreed on details of the bill, that he plans to sign it. The governor vetoed legislators’ earlier attempt to set higher pay rates for rideshare drivers in May 2023.

Minneapolis councilmembers voted last month to delay the effective date of an ordinance promising $1.40 per mile plus $0.51 per minute, as Lyft and Uber said they would shut down service in the city if those rates took effect.

The statewide legislation preempts any local regulation of rideshare companies, effective immediately upon the governor’s signature. The state-mandated pay rates are scheduled to take effect Dec. 1.

In addition to the pay rates, the state measure requires rideshare companies provide drivers with insurance for on-the-job injuries beyond what’s already covered by their automobile insurance. It also restricts the way companies deactivate drivers from using their networks.