Ridesharing companies like Uber and Lyft said fares could double if a bill passed by the Minnesota Senate becomes law. (AP Photo/Ted S. Warren) Credit: AP Photo/Ted S. Warren

A bill that would increase protections for drivers of rideshare companies is headed for Governor Tim Walz’s desk after having cleared the Minnesota Senate Sunday night. It had previously been passed by the House.

The bill has been heavily supported by Uber and Lyft drivers, who are considered independent contractors. That status has left drivers responsible for both employer and employee taxes and expenses, exempted their parent companies from providing benefits, and excluded them from many other standard workplace protections.

The measure passed on Sunday would set minimum pay rates for Uber and Lyft drivers and establish greater protections against wrongful termination, which drivers called “deactivations.”

Most rideshare drivers earn less take-home pay than they did 10 years ago, despite the increase in rideshare popularity and inflation, according to a news release from the Minnesota House. 

The bill was authored by Representative Hodan Hassan, DFL-Minneapolis, and Senator Omar Fateh, DFL-Minneapolis, among others.

“If your business relies on keeping your workers in poverty, you don’t have a viable business model, and you need to do better here in Minnesota,” Hassan said in a news release after the bill passed the House. “Rideshare companies have successfully made these changes in other states [that] have put their foot down to their unethical operations, and now, Minnesota will join the ranks and say, ‘Enough.’”

If your business relies on keeping your workers in poverty, you don’t have a viable business model, and you need to do better here in Minnesota.

Representative Hodan Hassan, co-author of rideshare bill

The bill calls for drivers to be paid at least $1.45 per mile and $0.34 per minute in the Twin Cities metro area and at least $1.25 per mile for trips that start outside the metro. Drivers would also get 80 percent of a cancellation fee if they’ve already started the trip to pick up a rider, according to the bill’s text.

The bill does not include food delivery drivers.

Uber has claimed that its drivers are fairly compensated, with Uber taking only a 19 percent cut of ride costs. However, many drivers testified in committee that Uber’s cut frequently exceeds 70 percent of what customers pay, according to the release from the House.

The House bill creates requirements for technology network companies, like Uber and Lyft, to promptly communicate with drivers who are deactivated and either work with them to be reinstated or provide evidence of wrongdoing. It also establishes minimum compensation rates for drivers and requires the companies to provide drivers with a detailed breakdown of mileage, travel time, and minimum compensation before accepting a ride request, as well as a receipt after the ride is complete.

The bill also establishes a pathway for drivers to take legal action against rideshare companies that violate the bill.

On Sunday night, the Senate passed the bill 35-32, leaving its fate in the hands of Walz.

A strong reaction from rideshare companies

Rideshare companies oppose the bill and are calling for Walz to veto it.

In a prepared statement, Lyft said ride fares would “more than double” if the measure becomes law.

“This bill would destroy rideshare for the majority of Minnesotans, especially those from low-income communities who use the service to get to work, to medical appointments or simply to get home safe late at night,” Lyft said. “Ride fares would more than double, meaning only the most wealthy could still afford one.

“Instead of signing this deeply flawed legislation that was rushed through the process without stakeholder involvement, we ask that Gov. Walz veto the bill and create a task force to properly study the best way to protect drivers while still safeguarding the affordability of the service,” the company said.

Lyft’s letter to Walz noted that increasing fares could make “the viability of the operational model in smaller cities outside of the Twin Cities uncertain” if the bill becomes law.

Uber said the bill could lead to Minnesotans paying fare prices comparable to those in New York City. The average prices for a rider in Minnesota would be about $3 less than what someone in New York City would pay, it said in a prepared statement.

“Unfortunately, what we’re left with is a bill rushed through in the final hours that will leave hundreds of low-income and disabled riders stranded and thousands of drivers without work,” Uber said.

Alfonzo Galvan is a reporter for Sahan Journal, covering work, labor, small business, and entrepreneurship. Before joining Sahan Journal, he covered breaking news and immigrant communities in South Dakota,...