Uber, Lyft call on Gov. Walz to veto legislation that would give rideshare drivers pay raise

Lyft and Uber officials are calling on Minnesota Gov. Tim Walz to veto legislation that would give rideshare drivers pay raises and job protection, saying the provisions would lead to fee hikes and force the companies to stop serving parts of the state.

The state Senate passed its version of the bill Sunday night, and the legislation now heads to Walz for his signature. The House passed its version last week.

If the legislation becomes law, rideshare drivers would be paid $1.45 a mile — one of the highest rates in the United States — and drivers would be guaranteed 34 cents per minute. They would also gain protections against being terminated or having their accounts deactivated.

The minimum wage guarantees would be indexed to inflation, with annual adjustments every July 1, according to the bill.

Both rideshare companies said they have asked state lawmakers for a compromise and to create a taskforce to study ways to raise rates for drivers while keeping the service affordable. That request was not granted, company officials said.

As passed, the bill "will leave hundreds of low-income and disabled riders stranded and thousands of drivers without work," said Uber spokeswoman Freddie Goldstein. "We hope Gov. Walz will reject this bill and work with all stakeholders on a solution that keeps rideshare affordable for all in Minnesota."

A Lyft spokesman said fares would more than double, eliminating rideshare as a transportation option for most riders if the bill is signed into law.

"This bill would destroy rideshare for the majority of Minnesotans, especially those from low-income communities who use the service to get to work, to medical appointments or simply to get home safe late at night," the company said in a statement.

The company said 60% of Lyft rides in Minnesota start or end in low-income areas, and the majority of riders earn below the state's median income.

Walz last week called the bill "an important piece of legislation" and said conversations about providing for gig economy workers are needed. But he did not commit to signing the legislation.

Eid Ali, who heads the Minnesota Uber/Lyft Drivers Association, said drivers in the metro are earning 60 cents per mile and between 20 and 25 cents per minute. Ali said he was paid $1.90 per mile when he started driving in 2014, but the rideshare companies have slowly chipped away at compensation over the last decade — even as the costs of gas, repairs and overall living continue to rise.

"We are getting less and less," Ali said in an interview Wednesday. "Everything is expensive. We are just trying to make a buck to feed our families."

Lyft and Uber say customers could see steep fare increases if the legislation becomes law. An Uber ride in Minneapolis would be about 50% more expensive than the same trip in New York City, the San Francisco-based company said. The 10-mile trip between downtown Minneapolis and St. Paul would reach close to $40 to $50, according to a March 7 letter Goldstein wrote to the House Labor and Industry Finance and Policy Committee.

Goldstein suggested the steep price increases would cause ridesharing trips to drop as much as 75% over time, leading to reduced work for drivers and as many as 7,000 leaving the platform. Wait times would likely increase due to the reduction in network density, Goldstein said.

"With such a loss in both supply and demand, we will unfortunately have no choice but to stop operating entirely in some parts of the state," she wrote. She did not specify where service might be curtailed or scaled back.

Lyft officials also said the company could leave many Minnesota markets outside the metro area if the bill comes law, creating transportation deserts across the state.

Company officials at Lyft said they worried the legislation would turn ridesharing into a luxury. In a recent email to customers, the company warned that fares could more than double in the Twin Cities, turning a $20 ride into one that's more than $50.

"Fair pay for drivers is an important topic, but it needs to be done in a way that doesn't jeopardize the service for the majority of Minnesotans," Lyft said in a statement. "Instead of forcing a bill that would destroy the service for many of the communities who depend on it, we should continue to work together on a solution that benefits all."

Goldstein also said the bill, if signed, would have an adverse effect on public safety.

"It has been well documented that TNC's [Transportation Networking Companies] reduce driving under the influence, another example of how this bill reduces public safety," she wrote in a letter to the Senate Judiciary and Public Safety Committee.

But Hodan Hassan, one of the Senate bill's sponsors, said in a statement Wednesday that rideshare companies have successfully made the proposed changes in other states.

"We will not tolerate bad actors exploiting hardworking Minnesotans to pad their corporate pockets," she said. "If your business relies on keeping your workers in poverty, you don't have a viable business model, and you need to do better here in Minnesota."

Staff writers Briana Bierschbach and Jessie Van Berkel contributed to this report.