Lyft and Uber to cease operations in Minneapolis after new minimum wage law

Lyft and Uber will stop offering services in Minneapolis on May 1 after the city council overrode the mayor’s veto of a minimum wage for rideshare drivers.

The city council on Thursday voted 10-3 in favor of the override, allowing rideshare drivers to be paid the local minimum wage of $15.57 an hour.

Lyft said in a statement the bill was “deeply flawed” and that the ordinance makes its “operations unsustainable.”

“We support a minimum earning standard for drivers, but it should be done in an honest way that keeps the service affordable for riders,” said a Lyft spokesperson.

Uber said in a statement obtained by CNN that it’s “disappointed the council chose to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work and leaving many stranded.”

Mayor Jacob Frey, a Democrat, said he supports a minimum wage for rideshare drivers but opposed the ordinance because it didn’t factor in a Minnesota state study that analyzed how much drivers should be paid.

“Everyone wants to see Uber and Lyft drivers get paid more. But getting a raise doesn’t do a whole lot of good if you lose your job,” Frey said, according to CNN affiliate WCCO-TV. “There will be a massive impact felt by our region.”

The ordinance mandates rideshare drivers make at least $1.40 per mile and $0.51 per minute within Minneapolis. However, the analysis Frey referred to showed lower numbers — $0.89 per mile and $0.49 per minute — to make minimum wage.

“We shouldn’t be afraid of data, we should be embracing it. We shouldn’t be ignoring studies that come out, we should be utilizing them and creating the best possible policy,” Frey told WCCO-TV.

The mayor is imploring local politicians to come up with a solution before May 1. The rideshare services say that user prices would double if they stayed in the city.

Minneapolis is debating the minimum wage as gig workers across the country are advocating for fair wages and job benefits. Cities and states have attempted to pass legislation in recent years amid the growth of the “gig economy,” or freelance work through apps like Uber and Grubhub, but have generally been met with fierce opposition.

Last year, Minnesota Gov. Tim Walz, a Democrat, also vetoed a bill that would have set a minimum wage for rideshare drivers, saying it would make Minnesota “one of the most expensive states in the country for rideshare.”

Lyft previously told CNN that the bill would be detrimental to drivers, who would ultimately earn less, “because prices could double and only the most wealthy could still afford a ride.”

In 2020, California passed Proposition 22, which was backed by more than $200 million from the most influential gig economy companies. The controversial ballot measure allows Uber and Lyft to treat drivers as independent contractors rather than employees. While it was a major win for Uber and Lyft, it did include a minimum earnings guarantee (excluding the time a driver spends waiting for a gig).

Last June, New York City announced a new minimum pay rate for food app delivery workers amid the rise in the use of services like Uber Eats and DoorDash since the pandemic. Uber and other food delivery apps sued the city in July, maintaining that the law would hurt delivery workers more than help them.

–CNN’s Jennifer Henderson and Ramishah Maruf contributed to this report.