Minnesota passes bill to guarantee minimum wage for gig workers

The Minnesota Senate passed a bill on Sunday that would guarantee Uber and Lyft drivers a minimum wage and other benefits, sending the measure to Governor Tim Walz.

The narrow pass, a 35-32 vote following an earlier 69-to-61 approval from the state’s House of Representatives, capped a dramatic week of political maneuvering so the bill would pass the legislature before its session ends on Monday. Drivers for Uber and Lyft are known as gig workers because they are treated as independent contractors, meaning they are responsible for their own expenses and have no guarantee of minimum wage, healthcare or other benefits.

If signed into law by the governor, Uber and Lyft would have to pay their drivers at least $1.45 per mile they drive with a passenger — or $1.34 per mile outside the Minneapolis-St. Paul region – as well as $0.34 per minute. It also establishes an appeals process for drivers to request a review if they believe they have been unfairly deactivated from the platforms, and requires additional transparency on how drivers’ earnings are calculated.

Mr. Walz has called the bill “an important piece of legislation”, but also has said that more talks need to take place before he commits to signing it.

The bill is a rare victory for labor lawyers in what has become a protracted, multi-state battle over the rights of handyman drivers and their status in the economy. Uber and Lyft have long argued that their drivers are independent contractors rather than employees. They say drivers prefer to be contractors because it gives them the flexibility to choose when they work, and many drivers only work part-time.

But labor advocates argue that drivers are being exploited by the companies and misclassified as independent, even though the ride-hailing services exercise significant control over their jobs.

The federal government has largely avoided getting involved in the debate, and the U.S. Department of Labor has not sued or targeted Uber or Lyft for misclassifying workers. Instead, the issue has played out in courts and state legislatures and on ballots.

New York City and Seattle passed laws guaranteeing minimum wages for gig drivers, while the companies prevailed to get their preferential regulations in California and the rest of Washington state on the agenda. Both states have passed laws that guarantee drivers certain benefits, such as a minimum wage, but also prevent them from becoming employees. A similar company-backed effort was rejected by Massachusetts judges last year.

Senator Omar Fateh, one of the authors of the bill, welcomed its passage. “These workers earn a living wage to provide for themselves and their families.”

Mr. Fateh and gig drivers from the Minnesota Uber/Lyft Drivers Association, a group that supports the bill, celebrated outside the legislative chamber on Sunday.

Uber and Lyft have criticized the Minnesota bill, arguing that it raises wages too high, and that the deactivation appeals process would limit their ability to ban drivers accused of misconduct. The companies say the extra cost will be passed on to riders, forcing them to pay more, and have instead proposed a guarantee of $1.17 per mile, as well as $0.34 per minute. Uber has said it could cut service in Minnesota — a threat it has made in other states in the past.

“If this bill were to pass, unfortunately, we would have no choice but to sharply reduce service statewide and potentially shut down operations entirely,” Uber said in a message to its Minnesota customers.

Lyft warned its customers that their fares could more than double if the bill passes, making “ride-sharing an expensive luxury.”