Update: This bill was vetoed by MN Governor Tim Walz as of June 2023.
Do you want Uber, Lyft, DoorDash, and other companies to be required to pay you a minimum wage and other benefits, or are you content working as an independent contractor? The ongoing Uber driver California battle involving Proposition 22 isn’t the only gig worker conflict in the country anymore. Many states and cities are grappling with the question, Are Uber drivers employees, and if they’re not, should they be?
Nothing makes Uber news and Lyft news faster than activity surrounding the controversy over how drivers are treated by the companies, and how companies might be regulated from one state to the next. Now Minnesota has new Uber laws in process that, if passed, would impose several measures on Uber and Lyft, and change the way they are required to treat drivers.
Will this legislation go all the way through, and if it does, what does it mean for the Transportation Network Companies (TNCs) you drive for, and for gig workers in Minnesota and elsewhere? Let’s begin by examining what the bill contains.
If passed by the state legislature and signed by the governor, the new Minnesota law will require the TNCs to
- pay Uber and Lyft drivers a minimum of $1.85 per mile and $0.25 a minute while drivers are on a trip, and $1.25 per mile and $0.10 per minute to pick up a rider if they are more than five miles away. These fares would also be subject to increase due to inflation.
- provide insurance for drivers, covering up to $1 million in medical costs and expenses, $500,000 for disability, and 75% of lost wages. These insurance provisions would be in effect whenever the driver is logged into the network, even if they are not accepting rides.
- institute clearer policies regarding driver deactivation.
While these stipulations in the third version of the bill reflect lower minimum costs for insurance and driver payments, the companies maintain that the bill’s passage and ultimate enactment would destroy their ability to do business in Minnesota.
Joel Carlson, a lobbyist for Uber, noted that even these lower minimum rates and benefits would lead to unreasonably high customer prices. Soaring costs for rides would decimate demand for the companies’ services, along with the jobs that the gig driving apps provide. The companies may also be forced to reinstate drivers they have deemed to be unsafe, which would, according to Carlson, be a public safety hazard.
Drivers maintain that the companies’ share of their fees has increased over the years, and that’s made it difficult to sustain a reasonable living driving as a Lyft or Uber independent contractor. In addition to issues related to compensation, drivers also have concerns about their personal safety while on the job, and the ease with which the companies can deactivate them.
In its present iteration, neither the companies nor the drivers are fully satisfied with the bill’s provisions. The terms are still being negotiated, as is the matter of how far the state legislators supporting the bill will go to bring it to a vote before the current session closes. You can keep up with the latest updates on the Minnesota Legislature website.
Over the last few weeks, crowds of Uber and Lyft drivers have assembled outside the state capitol in order to cheer on the legislators who support this bill. Hundreds of them have formed a new group, the Minnesota Uber/Lyft Drivers Association, to advocate for new Uber regulations on the state and local levels.
How have driver advocacy groups fared in other states? Let’s start with the most prominent case.
Are Uber drivers employees in California? They are not, and when Proposition 22 passed in November 2020, voters indicated that’s the way they wanted it to stay. Various court actions between California state officials and the TNCs have ensued since then. However, as Gridwise reported in March of this year, the companies won the latest round of the fight over Proposition 22 in California.
The legislators in Minnesota seem to have noticed the foibles of the California situation and have taken a different tack in their attempt to come up with a new Uber agreement. They are using a model that resembles one that was put into effect in Washington state. Unlike Proposition 22 in California, the Uber bill in Washington didn’t involve the issue of whether the drivers should be classified as employees or independent contractors. The same goes for similar regulations imposed by the NYC Taxi and Limousine Commission (TLC).
Instead, the Washington state laws, NYC TLC regulations, and the Minnesota proposal place restrictions on the companies through minimum payments to the drivers. It’s worth noting that the Minnesota legislation has significantly higher rates than Washington does. Depending on the type of trip, the minimum rates there are $1.27 per mile and $0.37 per minute, even though the cost of living in Washington is much higher than it is in Minnesota.
While these high rates might not bode well for the ultimate passage of the Minnesota bill, at least in its current form, the strategy of avoiding the independent contractor vs. employee controversy just might well serve Minnesota legislators and the drivers that support them. However, if they do succeed at passing the bill, and getting it signed by a seemingly reluctant governor, there may be far fewer opportunities for Lyft and Uber drivers in Minnesota.
Read more about Proposition 22 and what it means for drivers in this Gridwise post, and learn about about global trends in drivers’ rights through this article from Gridwise.
No matter where you stand in the midst of this controversy, it pays to maximize your income by tracking your earnings and expenses, and get insight about when and where you can make the most money. Gridwise gives you all these features and more.
Until the TNCs are forced to offer you insurance and disability coverage, plus other benefits most employees receive, Gridwise has your back there, too. Learn more about Gridwise Benefits, and you’ll discover ways to protect yourself and save money as an independent gig driver.
