Minnesota’s Gig Workers Receive Minimum Wage Protection in Newly Passed Bill – Wait, What?

On the 22nd of May 2023, something remarkable happened – Minnesota state senator Omar Fateh celebrated with drivers from the Minnesota Uber/Lyft Drivers Association after the Senate vote on the minimum wage bill.

It was such a dramatic week of political maneuvering that we are left perplexed and giddy. The bill finally cleared the legislature, and it is now in the hands of Governor Tim Walz.

We are left in a state of confusion as to how this could happen as drivers for Uber and Lyft are gig workers and treated as independent contractors, meaning they are responsible for their expenses, and they are not guaranteed minimum wage, health care, or any benefits.

Once Governor Walz signs the legislation, gig workers will receive a minimum wage of $1.45 per mile they drive a passenger – or $1.34 per mile outside the Minneapolis-St. Paul region – plus an additional $0.34 per minute. There will also be an appeals process to allow drivers to request a review if they feel they have been improperly deactivated from the platforms. The legislation requires additional transparency around how drivers’ earnings are calculated.

However, Governor Walz has indicated that he needs more time to think about it and convene more conversations before signing the bill into law.

The passage of the bill is considered 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.

We are left wondering if gig drivers are employed or merely independent contractors. Uber and Lyft have long argued that their drivers are independent contractors as drivers prefer being contractors because it allows them the flexibility to choose when they work, and many drivers work only part-time.

Labor advocates does not see it that way. They believe gig drivers are exploited by the companies and are being misclassified as independent, even though the ride-hailing services exert significant control over their work.

This issue has played out in state courts and legislatures and on ballot measures, with New York City and Seattle passing laws guaranteeing minimum wages for gig drivers. However, the companies have prevailed by getting their preferred rules on the books in California and the rest of Washington state.

In Massachusetts last year, a similar company-backed effort was thrown out by judges.

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

The passage of the bill has not gone down well with Uber or Lyft, as they argue 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, stating, “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.” Finally, both companies warn that the fares of their customers could more than double if the bill is enacted, turning “ride-sharing into an expensive luxury.”

The whole situation leaves one feeling both perplexed and physically unstable. Technology reporter Kellen Browning covers the gig economy, the video game industry, and general tech news for San Francisco. @kellen_browning