Uber, Lyft drivers say new Minnesota law hasn’t boosted pay

Twin Cities rideshare drivers spent close to two years lobbying first Minneapolis, then the state, to establish minimum pay rates for the industry.

Those new rates went into effect on December 1, but some drivers say they have yet to see any difference in their take-home pay.

A state bill signed into law in May gave drivers a pay floor of $1.28 a mile and 31 cents per minute. Before that, Uber and Lyft set pay rates based on market conditions.

The rideshare giants were so concerned about a Minneapolis ordinance setting an even higher minimum wage that they threatened to leave the state — before a last-minute deal in the Legislature overrode the Minneapolis rates.

Now that the new law is finally in effect, some drivers who pick up rides at the Minneapolis-St. Paul International Airport said the fine print will lead them to make less overall for certain rides.

“Nothing’s different, nobody’s said we have a little bit more money now,” said Mohamed Mohamed, an Uber driver at the airport’s rideshare parking lot.

According to him, during the last few days of November, rideshare drivers at the parking lot near the airport were excited about the upcoming change, but that excitement turned into confusion when they didn’t see an increase in their daily earnings.

That frustration has led drivers like Agwak Omot, who has only been driving for seven months in Minnesota, to consider leaving the industry.

According to the Uber website, the minimum compensation for drivers is $5 per ride. 

Because of that minimum compensation guarantee, the profit is typically better for shorter rides, Omot said. That leads some drivers to avoid long trips outside the metro area, where it can be difficult to pick up rides on the return trip.

Drivers are only paid for the time spent transporting a passenger, Omot said.

“I have to pay gas and recently almost $700 [on winter tires],” he said.

Some of the frustrated drivers have reached out to Uber and Lyft with questions since the new law went into effect. Uber directed them to a blog post explaining how the new rates are paid.

The confusion stemmed from drivers thinking that they’d get the rate per ride, instead both Uber and Lyft have said the minimum compensation required under Minnesota law would be paid out after adding up the minutes and miles driven during a 14-day window.

Trips driven where the driver made more than the minimum rate could be used to average out the trips where they made less than the new rate.

“If you’ve earned less than the required minimum compensation for the earnings period, you will be paid an additional sum accounting for the difference in your earnings and the minimum compensation,” read Uber’s blog post.

Salman Ahmed, one of the drivers who called Uber on Monday, said drivers are concerned that there’s now a public perception that the new law gave them a pay increase when drivers aren’t seeing that increase.

In the months leading up to the law’s enactment, several smaller rideshare companies, including MyWeels, Wridz, Hich and Moov, entered the market, hoping to pick up market share if Uber and Lyft left the state. Many promised better pay rates for drivers. But Salman said he’s only driven for Uber and Lyft, which still dominate the market.

“They might pay more,” he said of the smaller rideshare companies, “but it’ll take way longer to get a ride.”

Hich owner Mustafa Sheikh launched local service in October and said at the time he expected an influx of new drivers when the pay floor went into effect in December. 

The company currently has close to 500 active drivers, he said, and it is onboarding another 900.

He said language and comprehension issues led to current driver confusion with the new law. But once they get paid, they’ll notice a difference.

Mustafa also said that the frustration from drivers could lead to a stronger market share for alternative rideshare apps.

“It’s not going to be day and night, because we’re competing with companies that have been in the business for 15 years,” Mustafa said.

Moov is the most recent rideshare company to get licensed in Minneapolis. Owner Murid Amini said he’s brought on about 140 drivers since launching in September and for now has really focused on building his brand around the University of Minnesota campus.

Amini said he suspects the minimum wage law for rideshare drivers could negatively impact some drivers under Uber’s premium services like Uber Black.

“They never were obligated to pay them [drivers] anything. But now they can kind of fall back on that minimum law,” Amini said.

“Drivers, they’re used to getting their pay the same day,” he said. “They don’t want to be underpaid for a two-week period, wait for Uber to make all their profits and interest and all that stuff.”

Uber spokeswoman Freddi Goldstein noted drivers’ confusion during the last couple of days and said the drivers would be paid according to the law and clarified the company would make sure at the end of every 14-day pay period that drivers got paid anything extra they were owed.

“The bottom line is that drivers will be paid at least $1.28 for every mile driven and $0.31 for every minute. The pay may not be applied on every trip, meaning some trips drivers will make that, some they will make more and some they will make less,” Goldstein said.