Minnesota Gov. Tim Walz on Thursday vetoed a bill that would have guaranteed a minimum wage and other protections for Uber and Lyft drivers.
“Rideshare drivers deserve safe working conditions and fair wages, and I am committed to finding solutions to these issues that balance the interests of all Minnesotans, drivers and passengers alike,” Mr. Walz, a Democrat, wrote in a letter to the Speakers of the Minnesota House of Representatives. But that’s what he said the law passed by the state legislature last week“is not the right bill to achieve these goals.”
The bill was seen as a significant victory for labor advocates who have campaigned across the country for greater benefits for gig drivers. Uber and Lyft treat their drivers as independent contractors and not employees, meaning drivers are responsible for their own expenses and do not receive health care or other benefits. The companies state that their business model allows drivers to retain the flexibility they want.
The legislation would have required Uber and Lyft to pay their drivers at least $1.45 per mile traveling with a passenger, or $1.34 per mile outside the Minneapolis-St. Paul area and $0.34 per minute. It would also have introduced a vetting process, allowing drivers to protest instances where they have been disabled by the platforms.
Mr. Walz echoed the arguments of Uber and Lyft, who said the minimum wage was too high for a region like Minnesota, forcing them to drastically limit their ridesharing opportunities in the state as the cost to riders rose.
Earlier on Thursday, Uber said it would pull out of Minnesota in early August if the law passed, leaving only its premium service in the state’s largest metro area.
“This bill could make Minnesota one of the most expensive states in the country for ridesharing, potentially bringing us on par with rideshare fares in New York City and Seattle — cities with significantly higher living costs than Minnesota,” Mr. Walz wrote in his letter.
In addition to the veto – his first – Mr. Walz also issued an executive order establishing a commission to investigate ride-sharing in Minnesota and recommend policy changes to ensure drivers are paid fairly.
Uber welcomed the news and said it would support another bill that would set a slightly lower minimum wage and ensure Minnesota drivers are classified as independent contractors rather than employees, a long-standing goal the company has pushed in other states .
“We appreciate the opportunity to get this right and hope lawmakers pass a compromise quickly in February,” said Freddi Goldstein, an Uber spokeswoman.
CJ Macklin, a Lyft spokesman, added, “Legislators should enact fair pay and other safeguards, but they must do so in a way that doesn’t compromise the affordability and safety of those who depend on the service.”
State Senator Omar Fateh, one of the drafters of the bill, criticized Mr. Walz’s decision on Twitter.
“Today we saw the energy companies grip our government,” he wrote. “The fight isn’t over yet and I promise you I won’t back down.”