Apr 29, 2024 - News

The biggest hurdle facing Minnesota's possible Uber, Lyft deal

A directional sign at an airport reading Uber/Lyft with a car in a pickup lane in the background

A sign directing travelers to the Uber/Lyft pickup zone at the Minneapolis-St. Paul International Airport. Photo: Kyle Stokes/Axios

State negotiators have made progress toward keeping Uber and Lyft in the Twin Cities, but one friction point remains: whether Minneapolis should still be able to set its own driver pay rules.

Why it matters: Both rideshare companies have threatened to stop or limit service in the metro if Minneapolis' mandated driver pay ordinance takes effect July 1, ramping up pressure on the Minnesota Legislature to intervene.

Yes, but: State intervention won't matter if Uber, Lyft, lawmakers, and drivers can't agree on whether Minnesota should override the city's driver pay increase — which they have not yet done.

State of play: Where to set minimum pay rates for rideshare drivers is "the big question remaining" in statewide negotiations, House Majority Leader Jamie Long (DFL-Minneapolis) told Axios.

  • Sen. Omar Fateh (DFL-Minneapolis), said he's "optimistic" about reaching an agreement on pay, saying the parties are "closer than we are apart."

Friction point: Even if negotiators agree on a state-level pay rate, the thorny issue of whether that should "preempt" Minneapolis' ordinance looms as a possible deal-breaker.

  • Long opposes preemption. "It's been a long-standing fight for the city" to have the power to pass its own "leading-edge" worker protection laws, he said.
  • Uber spokesperson Josh Gold told Axios that sealing a deal will be tough without preemption. Lyft spokesman Eric Smith agreed preemption is an "important issue."

Gov. Tim Walz "would support a statewide standard … that allowed these essential companies to remain in the state," a spokesperson said in response to a question about whether he supports preemption.

What we're watching: "One possible outcome," Long said, would be for the Minneapolis City Council to adjust the ordinance to match a new statewide rate — which could avoid messy negotiations over preemption.

  • He said council members are "important stakeholders" in the ongoing negotiations.
  • While some members could be open to that, the ordinance's original authors have said they oppose "changing the rates to subminimum wage equivalents."
  • Matching the city and state rates might not be enough for Uber. Gold said the company doesn't want to be subject to a city-by-city patchwork of regulations, not only on the base rates but also on issues like how surge fares are calculated and compliance is monitored.

By the numbers: Minneapolis' rule would require that drivers earn at least $1.40 per mile while operating within city limits.

  • A state analysis said a rate of between 89 cents and $1.21 per mile would be enough to guarantee drivers earn the equivalent of a $15 minimum wage after expenses.
  • Walz "wants any legislation to be based on the data that study provided," a spokesperson told Axios.
  • Gold declined to share Uber's target rates, but Lyft spokesperson Eric Smith said the company is pushing for 89 cents per mile.

The intrigue: The rideshare companies are also looking for guarantees that Minnesota drivers will not be reclassified as employees, who enjoy more job protections and have the right to unionize.

  • Some sources suggested it might be possible to assure the rideshare companies that drivers would remain "independent contractors" without explicit language in the bill.
  • Lyft disagreed: "The state can offer no assurances except explicit language," Smith said.

What's next: The Legislature must adjourn by May 20, potentially giving negotiators less than a month to finalize a deal.

Go deeper: What Minneapolis can learn from Uber and Lyft's year-long exit in Austin, Texas

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