New minimum pay kicks in for Minnesota rideshare drivers

Rideshare drivers across Minnesota got a pay raise Sunday when a new law governing minimum wages kicked in, and it comes after local Uber and Lyft drivers pushed for nearly two years to get better compensation and job protection.

The new rates could also bring up to a 25% increase in trip fees for riders, Uber spokeswoman Freddi Goldstein said in an email, “though pricing is always subject to change,” she said.

State law now requires rideshare companies to pay drivers $1.28 per mile and an additional 31 cents per minute while passengers are in the vehicle. Drivers will receive a minimum of $5 per trip and 80% of any cancellation fee charged to riders who call off a trip after a driver is on the way to pick them up. On top of that, rideshare drivers will also earn extra pay if transporting a rider in a wheelchair-accessible vehicle.

Tips are not included in the minimum pay calculations.

Under the law, rideshare drivers have the potential to make more money, as much as 20% more, DFL leaders said in the spring before the legislation passed. But not all drivers are convinced they will.

A provision in the law allows Transportation Network Companies (TNCs) to average a driver’s earnings over a two-week period and pay them the minimum on that average. If a driver’s average is below the mandated rate, the companies will provide a “top off” payment to bring drivers up to the minimum pay, according to a posting on Uber’s blog.

That does not sit well with some metro area drivers.

The law “is absolutely not beneficial to the drivers,” said Prince Lee, who drives for both Uber and Lyft in the Twin Cities area. “We need $1.28 paid straight for every ride.”

Drivers earnings are based on trip fees, which differ depending on time of day and type of service ordered. A trip during a Vikings football game, bar rush or to the airport, for example, will be priced differently than a trip in the suburbs during the middle of the day.

John Frid, of Hopkins, who drives for Uber and Lyft, said the arrangement allows TNCs to average fees of all trips provided by a driver over a two-week period and pay the $1.28 rate based on the average.

“The end result is that most drivers will see only a small increase in pay, if any,” he said.

Other drivers have expressed optimism that their paychecks will be larger and help cover rising costs of gas, living and vehicle maintenance, said Eid Ali, president of the Minnesota Uber/Lyft Drivers Association (MULDA), which helped push for the pay increase.

One day into the new pay structure, Ali said he has received “hundreds” of calls from drivers wanting to know why they must wait two weeks for TNCs to calculate and pay out the new supplement.

“MULDA is working to educate drivers about the process, ensuring they understand the timeline and what steps they can take to safeguard their earnings,” Ali said.

Drivers began the push for higher pay about two years ago, and that led to the Minneapolis City Council to adopt an ordinance that called for drivers to be paid $1.40 a mile and 51 cents a minute while a passenger was in the vehicle within the borders of Minneapolis. Uber and Lyft said that rate — which would have been one of the highest in the country — would force them to leave the market.

Other ride-hailing companies such as Wridz and MyWeels began serving the market.

The pay issue reached the Legislature in 2023, but a bill calling for higher pay was eventually vetoed by Gov. Tim Walz. The governor subsequently signed a bill this spring establishing the new pay structure, overriding the Minneapolis ordinance.

The measure also has protections for drivers against being terminated or having their accounts deactivated and gives them an avenue to appeal. The law also expands TNCs’ insurance requirements starting Jan. 1.

Since Sunday, some former drivers are working to get back on the platforms, Ali said: “Over 98% of the drivers coming to our office are former drivers whose accounts were deactivated and who are seeking to have their accounts reinstated.”