Governor Tim Walz of Minnesota on Thursday vetoed a bill that would have guaranteed a minimum wage and other protections for Uber and Lyft drivers.
“Railway 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 riders alike,” wrote Mr. Walz, a Democrat, in a letter to the Speaker of the Minnesota House of Representatives. But he said the legislation, which passed the state legislature last week, “is not the right bill to achieve those goals.”
The bill had been seen as a significant victory for labor lawyers, who have been fighting for greater benefits for gig drivers across the country. Uber and Lyft treat their drivers as independent contractors rather than employees, meaning drivers are responsible for their own expenses and do not receive health care or other benefits. The companies say their business model allows drivers to maintain the flexibility they want.
The legislation would have required Uber and Lyft to pay their drivers at least $1.45 per ride. mile they drive with a passenger, or $1.34 per mile outside the Minneapolis-St. Paul area, as well as $0.34 per minute. It would also have established a review process that lets drivers protest cases where they were disabled from the platforms.
Mr. Walz joined the arguments of Uber and Lyft, which said the minimum wage was too high for a region like Minnesota and would require them to drastically curtail their ride-sharing businesses in the state as costs rose for riders.
Earlier Thursday, Uber said it would pull out of Minnesota in early August if the bill passes, leaving only its premium service in the state’s largest metropolitan region.
“This bill could make Minnesota one of the most expensive states in the country for ride shares, potentially putting us on par with the cost of rides in New York City and Seattle — cities with dramatically higher costs of living than Minnesota,” Mr. Walz wrote in his letter.
Aside from the veto — his first — Mr. Walz also issued an executive order creating a commission to study the ride-share business in Minnesota and recommend policy changes to ensure drivers receive fair compensation.
Uber cheered the news, saying it would support another bill that would offer a slightly lower minimum wage and ensure that drivers are classified as independent contractors rather than employees in Minnesota, a longtime goal of the company that it has promoted in other States.
“We appreciate the opportunity to get this right and hope the Legislature quickly passes a compromise in February,” said Freddi Goldstein, an Uber spokeswoman.
CJ Macklin, a Lyft spokesman, added that “lawmakers should enact fair wages and other protections, but do so in a way that does not jeopardize the affordability and safety of those who rely on the service.”
State Senator Omar Fateh, an author of the bill, criticized Mr. Walz’s decision on Twitter.
“Today we saw the power corporations hold our government,” he wrote. “The fight is not over and I promise you I will not back down.”
