Uber and Lyft will continue operating in Minnesota after state lawmakers reached a last-minute agreement over rideshare driver pay rates.
Under the agreement, reached during a chaotic conclusion to the legislative session, rideshare drivers will be paid $1.28 per minute and 31 cents per mile, according to the Star Tribune. The state’s Democratic governor, Tim Walz, has agreed to sign the measure.
The new state agreement preempts an ordinance passed earlier this spring by the Minneapolis City Council, which would have mandated driver pay at a significantly higher rate — $1.40 per mile and 51 cents per minute, part of an effort to ensure the drivers earned the equivalent of the city’s $15.57 minimum wage. In response, the two rideshare giants vowed to stop providing service in the city if the rate wasn’t lowered.
Councilmembers determined new driver-pay rates without requesting local data from the rideshare companies or inviting the companies’ leaders to engage in their process.
Lyft leaders called the Minneapolis ordinance “deeply flawed.”
The day after the city council’s vote, the state’s Department of Labor and Industry released a study, which found that drivers could earn the equivalent of the minimum wage if they are paid 89 cents per mile and 49 cents per minute, far below the council’s rate. Upping that to $1.21 per mile and 49 cents per minute could afford them additional benefits, the study found.
While the pay rate approved by lawmakers over the weekend is higher than Uber and Lyft had advocated for, both companies have agreed to continue operating in the state.
“While the coming price increases may hurt riders and drivers alike, we will be able to continue to operate across the state under the compromise brokered by the governor,” Uber spokesman Josh Gold said in an email to the Star Tribune.
A Lyft spokesman told National Review that the legislation approved over the weekend builds on the company’s efforts to increase driver pay in “smart, deliberate ways.”
“Through direct engagement with all stakeholders, we have found enough common ground to balance a new pay increase for drivers with what riders can afford to pay and preserve the service,” the Lyft statement said.
The final driver pay rate is changed slightly from a tentative agreement lawmakers had reached in early May that would have paid drivers $1.27 per mile and 49 cents per minute. Uber and Lyft both opposed that rate, and said they would leave Minnesota if it passed.
Not everyone was on board with the final agreement, including some far-left Minneapolis city councilmembers, who were unhappy with having their ordinance preempted. The council’s vice president, Aisha Chughtai, wrote on X that “preempting Minneapolis is gross” and she accused Walz of caving to “multibillion dollar corporations.”
At one point, the negotiations over the rideshare pay bill shut down the senate and forced the chamber into an 11-hour recess over the weekend, according to the Star Tribune.
Uber and Lyft drivers provide hundreds of thousands of rides per week in the Twin Cities metro area. The companies have become a vital resource for the region’s elderly and disabled residents who use the services to get to work and to medical appointments.
While some supporters of the Minneapolis council suggested that Uber and Lyft were bluffing about their intention to leave, other regional leaders expressed serious concerns about the repercussions if they did pull out of the Twin Cities or the entire state. While several upstart companies expressed interest in filling the gaps if Uber and Lyft left, Walz and other leaders suggested that it was unlikely those small firms could ramp up operations fast enough to prevent major service disruptions.