Minnesota Governor Vetoes Minimum Pay for Ridehail Drivers After Uber Threatens to Leave

Minnesota Governor Tim Waltz has vetoed a law that would result in guaranteed minimum pay for ridehail drivers after Uber threatened to end service in the Twin Cities area if it went into effect.

The bill would have mandated minimum per and minute per mile payouts to drivers, with different rates set for the Twin Cities area and for the rest of the state. The pay would have been indexed to inflation. The bill also states that nothing in it “prohibits collective bargaining or is a basis to conclude whether a driver is an employee or independent contractor.”

In an email to its drivers that was shared with KSTP in Minneapolis, Uber urged its drivers to reject the legislation on the basis that it “leaves you vulnerable to becoming employees—something we have been told repeatedly drivers do not want.” The company said that the bill would double the cost of driver trip requests and leave “thousands of drivers without work.” The company said it would “likely have no choice but to reduce service throughout the state and possibly shut down services entirely.”

When the bill passed the Minnesota house and senate on May 22, drivers in support of the legislation hoisted one of the bill’s sponsors, Senator Omar Fateh, on their shoulders and cheered in celebration at the statehouse, a celebration that was short-lived.

Drivers also gathered outside of Governor Waltz’ office Thursday night urging him to sign the bill. But the last minute threat from Uber to end its service in Minnesota and reduce service in the Twin Cities regions helped push Waltz to buckle and veto the legislation. The governor said in a statement that the threat factored into his decision. 

"You take it into consideration, certainly,” Governor Walz told news outlet WCCO. “I don't necessarily view that they're evil in this but I do believe there needs to be more transparency in how this works. There's concerns coming from the disability community, some of the victims and domestic violence folks who use Uber to get out of these tough situations are simply not comfortable with where this is at.”

Walz instead signed an executive order setting up a committee to create recommendations to enshrine driver protections while ensuring that ride hail companies can continue to operate in Minnesota. The recommendations would also “Limit impact on fares for riders, especially riders in the disability community and low-income communities who rely on these services.”

"While it was always our goal to pass comprehensive legislation this session that would raise rates for drivers while providing them the flexibility and benefits they tell us they want, that is not the bill we ended up with,” an Uber spokesperson said following the veto, CNBC reported. “We appreciate the opportunity to work together to get this right and hope the legislature quickly passes a compromise in February." 

The bill that was vetoed would have also provided drivers with a written process to contest deactivation. Ride hail drivers have long complained that they can be removed from ride hail apps without being made aware of the complaint that got them booted from the service.

According to the bill,”The driver has a right to a meeting with the TNC to reconsider the deactivation.The deactivated driver must have an opportunity to present their position and any other relevant information or witnesses regarding the alleged rule violation.” Out of safety concerns from riders, it also contains a series of caveats for certain convictions that would result in drivers being kicked off the service. 

Uber, which has never made a profit, has made similar threats before when faced with legislation that would affect its business model. In 2020, CEO Dara Khosrawshahi, said the company would temporarily shut down in California while voters deliberated a ballot proposition allowing the companies to classify drivers as independent contractors rather than employees. That vote, Proposition 22, passed, and has been held up as law following court challenges.