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Minnesota passes bill ensuring minimum pay for gig workers

By Nithya Bose in US Business & Employment News, posted May 22, 2023

The Minnesota Senate has passed a bill ensuring a minimum wage and extra benefits for gig workers, especially Uber and Lyft drivers.

The measure now awaits the signature of Governor Tim Walz.

The bill narrowly passed with a vote of 35-32 in the Senate, following an earlier approval of 69-61 in the state's House of Representatives.

Gig workers, classified as independent contractors, have been responsible for their own expenses and are not entitled to a minimum wage or healthcare benefits.

If signed into law, Uber and Lyft drivers will be paid a minimum of $1.45 per mile for rides within the Minneapolis-St. Paul region, or $1.34 per mile outside the region, in addition to $0.34 per minute.

The bill also establishes an appeals process for drivers who believe they have been improperly deactivated from the platforms.

It requires greater transparency regarding the calculation of drivers' earnings.

Governor Walz acknowledged the bill as "an important piece of legislation" but expressed the need for further discussions before signing it.

This bill represents a rare victory for labor advocates in an ongoing battle across multiple states over gig drivers' rights and employment classification.

Uber and Lyft have consistently argued that their drivers are independent contractors, highlighting the flexibility this status offers regarding working hours.

However, labor advocates argue that drivers are being exploited and misclassified, asserting that the ride-hailing companies exert significant control over their work.

This issue has been subject to state-level debates and legal proceedings, with New York City and Seattle passing laws to ensure minimum wages for gig drivers.

In California and Washington state, the companies have successfully implemented regulations that guarantee some benefits to drivers while preventing them from being classified as employees.

However, a similar effort supported by the companies was dismissed by Massachusetts judges in 2022.

Senator Omar Fateh, one of the bill's authors, celebrated its passage, emphasizing that gig workers deserve a livable wage to support themselves and their families.

Uber expressed disappointment with the bill's approval, stating that they had been seeking a compromise to raise driver rates without negatively impacting riders.

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Uber and Lyft argue the proposed wage increase is too high and that the appeals process for driver deactivations would limit their ability to remove drivers accused of misconduct.

The companies claim the additional costs would be passed on to riders, increasing fares.

They have suggested a guarantee of $1.17 per mile and $0.34 per minute as an alternative.

Uber has previously threatened reduced service in other states.

Lyft echoed similar sentiments in a letter to the governor, urging him to veto the bill and establish a task force to explore the best approach for driver protection while maintaining service affordability.

Both companies cautioned customers that fares could double if the bill became law, transforming ride-sharing into an expensive luxury.

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