The gig economy has had a substantial impact on employment nationwide, and Minnesota is no different. Minneapolis in particular has been a hotbed for disputes between rideshare companies and local lawmakers trying to increase pay for their drivers. National rideshare companies recently threatened to pull out of Minneapolis entirely after the city council mandated pay increases that the companies said went further than necessary to meet the city’s minimum wage standards. Implementation of the new ordinance, and the threatened exodus by rideshare employers, have been delayed while the state legislature works on passing new regulations for the industry that would apply across Minnesota.
Two companion bills were introduced in the Minnesota State House and Senate in March of this year that will have significant impacts on rideshare employees if and when the legislation is passed. The bills (HF 4746 and SF 4780) would add a new section to the Minnesota Labor and Industry Statutes, applying to any other “that uses a digital network to connect transportation network company riders to transportation network company drivers who provide prearranged rides.” While neither bill has been finalized or passed, some of the provisions being considered include:
- Minimum per-minute and per-mile compensation for drivers (not to be lower than $5.00 and excluding tips) depending on whether a ride starts inside or outside the Twin Cities metro area
- Mandating that drivers are paid at least every fourteen days
- Requiring companies to provide their drivers with three-days’ written notice before deactivating them from an app, and providing drivers a right to appeal
- Prohibiting discrimination against prospective drivers based on race, national origin, color, creed, religion, sex, disability, sexual orientation, marital status, or gender identity
- Expressly permitting drivers to bring private actions against rideshare companies for violating the new law
- Prohibiting mandatory arbitration of drivers’ claims
- Adding additional insurance requirements to provide coverage for drivers injured on the job
The actual per-minute and per-mile minimum wage that the new law would impose is a major sticking point and is being heavily negotiated among state lawmakers. Whatever those negotiations produce, however, it is likely that the Minnesota State Legislature will pass a new rideshare law in some form before the current session ends in May and before the Minneapolis municipal ordinance is set to go into effect in July. Rideshare companies operating in Minnesota will have to be prepared not just to possibly increase their compensation to drivers, but to meet new requirements for pay frequency, written notices, and insurance. The new law will undoubtedly also lead to increased litigation against rideshare companies alleging wage and hour violations, discrimination claims, and wrongful deactivations or terminations of drivers. With the prohibition on mandatory arbitration, many of those claims will end up in Minnesota state courts. And these changes will likely be coming soon—as currently drafted, the new regulations are intended to take effect on August 1, 2024.
Future regulations may impact other app-based drivers as well. While they seem unlikely to pass this session, bills were introduced earlier this year in both the Minnesota House and Senate addressing delivery drivers for companies “that maintain[] an online-enabled application or platform used to facilitate delivery services,” such as takeout or grocery delivery. The proposed laws would impose additional insurance requirements, require companies to establish and contribute to portable benefits accounts, set explicit parameters for a driver’s status as an independent contractor, and prohibit discrimination against prospective drivers.
However the rest of this legislative session shakes out, it is clear that the Minnesota state legislature is paying special attention to app-based drivers in the gig economy. Companies should expect that new laws and regulations will be coming this year and in the near future. Prudent leaders will be keeping a close eye on coming legislation and prepare accordingly.
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