Uber and Lyft to stay in Minneapolis after state lowers driver pay requirements

Uber and Lyft will continue operating in Minneapolis after the state legislature approved a lower minimum pay rate for drivers over the weekend, according to reports from the Minnesota Reformer and StarTribune. The new rates will go into effect on January 1st, 2025, if the bill becomes law, and will guarantee drivers at least $1.28 per mile and 31 cents per minute.

In March, Uber and Lyft threatened to leave Minneapolis after city officials passed an ordinance to increase rates to $1.40 per mile and 51 cents per minute while carrying a rider. The ridehailing companies argued that the ordinance was “deeply flawed,” as city officials determined the rate before the state released a study on how much drivers should be paid to earn Minneapolis’ minimum wage.

The new rates devised by Minnesota lawmakers preempt the ordinance passed by Minneapolis officials. In addition to establishing a minimum rate across the state, the bill will let Uber and Lyft drivers appeal account deactivations while also mandating vehicle insurance and compensation for injuries while on the job.

“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,” Lyft spokesperson CJ Macklin said in an emailed statement to The Verge. Uber spokesperson Josh Gold tells StarTribune that the company will continue providing services in the state even though “the coming price increases may hurt riders and drivers alike.”

All that’s left is for Minnesota Governor Tim Walz to sign the bill. During a press conference on Saturday, Walz said it will allow people in Minnesota “to continue to use these services if they see fit.” Last year, Governor Walz vetoed legislation that he claimed would’ve made Minnesota one of the most expensive states for ridesharing.

In 2020, Uber and Lyft threatened to stop offering their services in California over a new law that would classify their drivers as employees. This isn’t the end of Uber and Lyft’s costly driver classification problem, either. The companies are facing a lawsuit in Massachusetts that accuses the ridesharing services of misclassifying their drivers as independent contractors, while New Jersey is suing Lyft over similar arguments.