Gov. Walz issues first veto, blocks bill setting minimum wage for Uber and Lyft drivers

Gov. Tim Walz issued the first veto of his entire tenure on Thursday, striking down a bill that would have set minimum pay rates for Uber and Lyft drivers and provide them greater protection against being fired.

Walz’s office announced the veto hours after Uber said it would pull out of greater Minnesota and only provide “premium services” in the Twin Cities metropolitan area if the governor signed the bill into law.

In the same email announcing the veto, the governor said he issued an executive order to convene a working group — including drivers, riders, and transportation network companies — to make recommendations for legislation next year.

“Rideshare drivers deserve fair wages and safe working conditions. I am committed to finding solutions that balance the interests of all parties, including drivers and riders,” Walz said in a statement. “This is not the right bill to achieve these goals. I have spent my career fighting for workers, and I will continue to work with drivers, riders, and rideshare companies to address the concerns that this bill sought to address.”

The legislative session was one of the most consequential for workers in at least a generation, while business interests were repeatedly rebuffed. There were two notable exceptions: Walz’s veto of the Uber and Lyft regulations, and a bill backed by the nurses’ union to increase nurse staffing levels, which failed after the Mayo Clinic threatened to pull billions in future investments out of the state.

Uber and Lyft celebrated the veto, saying the legislation was rushed and would have made rides unaffordable for the majority of their customers.

“Lawmakers should pass fair pay and other protections, but it must be done in a way that doesn’t jeopardize the affordability and safety of those who rely on the service,” a Lyft spokesman said in a statement. “We look forward to continuing our engagement and finding a similar pathway forward here in Minnesota.”

The bill regulating Uber and Lyft passed on Sunday after weeks of organizing and trips to the Capitol by hundreds of Uber and Lyft drivers. The bill was revised substantially in the final days of the session after Sen. Omar Fateh, DFL-Minneapolis, revived the bill with the prospect that he could hold up other legislation in a closely divided Senate.

Fateh decried the veto in a tweet on Thursday writing, “While Uber and Lyft had access to the administration and elected officials, I want to make it clear that not once has the administration reached out to the drivers. Not one conversation. It is clear that the misinformation spread by (transportation network companies) stuck without an opportunity for rebuttal.”

Fateh previously said the governor made a commitment to sign the bill, which the governor’s office denied.

Uber estimates the regulations would have caused the price of rides to increase by at least 50%, causing demand to drop by 30%. The company says drivers in Minnesota would be paid more per mile than anywhere else in the country.

The bill required transportation network companies, including Uber and Lyft, to pay drivers a $5 minimum fee plus $1.45 per mile and 34 cents per minute in the seven-county Twin Cities metropolitan area. Drivers in greater Minnesota would have been entitled to $1.25 per mile and 34 cents per minute. The minimum rates would have increased with inflation.

Drivers would also have been entitled to 80% of cancellation fees if they already departed to pick up a rider, as well as $1.25 per mile and 10 cents per minute if the companies charge customers for a “long pickup.”

The rates proposed in Minnesota’s bill for the Twin Cities metro area were slightly higher than those mandated by Washington state, which is $1.27 per mile and 37 cents per minute. Seattle’s rates — $1.50 per mile and 64 cents per minute — are only slightly higher than the proposed Twin Cities rates, despite having a significantly higher cost of living.

The bill passed by the Legislature also included protections for drivers against wrongful termination, or “deactivation.” Drivers complain that the company can kick them off the app for any reason, leaving them with a large car payment and no recourse to get their jobs back.

Transportation network companies would have been required by the legislation to have clear written rules stating the circumstances under which a driver could be deactivated or sanctioned. Companies would have to provide drivers with a written explanation for any proposed deactivation or sanction, and drivers would have the right to appeal those decisions.

The companies said those rules would have forced them to find victims of assault or other serious misconduct to testify in order to keep problem drivers off the platform. The companies also took issue with the bill’s provision requiring them to allow former drivers to challenge deactivations going back to 2021.

* This story was updated following Gov. Tim Walz’s veto of the bill regulating Uber and Lyft.

Editor’s note: The Minnesota Reformer is an independent, nonprofit news organization dedicated to keeping Minnesotans informed and unearthing stories other outlets can’t or won’t tell. 

Max Nesterak, the deputy editor of the Minnesota Reformer, wrote this piece. It originally appeared in the Minnesota Reformer on May 25.