Uber and Lyft are threatening to pull out of Minneapolis after a City Council vote guaranteed a minimum hourly wage for drivers.
The council voted 10-3 Thursday to override the mayor’s veto of an ordinance requiring ride-hailing services to pay drivers a minimum rate of $1.40 per mile and 51 cents per minute to ensure they earn the equivalent of local minimum wage of $15.57 per hour.
The wage ordinance was first approved last week, but was vetoed by Minneapolis Mayor Jacob Frey.
Both Uber and Lyft have said they will stop operating in the city when the law takes effect on May 1. Uber added that it will leave metro Minneapolis, including the airport, making it the first metro area in the country without an Uber presence.
The companies argued that they would be forced to pass on the increased costs to riders, which would result in drivers ultimately earning less. In a statement, Lyft called the bill “deeply flawed,” adding that “this ordinance would put rides out of reach for the majority of Minneapolis residents.”
The ordinance is the latest minimum wage law for gig economy workers as tensions rise between workers and gig companies over fair pay. In September, New York City required tech platforms like Uber, DoorDash and Grubhub to pay food delivery workers about $18 an hour. States including Washington and California, as well as cities like Seattle, have set minimum wage standards for gig workers over the years.
Critics of the Minneapolis bill include Minnesota Mayor and Governor Tim Walsh, who vetoed a similar bill last year.
Supporters, such as City Councilman Jamal Osman, who authored the law, he said that ride-hailing services in Minneapolis rely heavily on drivers from low-income or immigrant communities;
The companies are expected to push for a bill that could overturn the Minneapolis ordinance. Last week, Minnesota state lawmakers proposed minimum wage standards for ride-hailing drivers at a rate slightly lower than what the city of Minneapolis approved.
