On Friday, Uber Technologies and Lyft announced that they will cease operations in Minneapolis beginning on May 1st.
The Minneapolis City Council passed legislation that allows drivers to receive a minimum wage.
A vote of 10-3 by the council decided to override Mayor Jacob Frey’s veto, ensuring that rideshare drivers in the city are paid $15.57 per hour.
“The Council’s choice to ignore the data and kick Uber out of the Twin Cities, putting 10,000 people out of work and leaving many stranded, disappoints us,” stated Uber in an announcement.
While this is going on, Lyft, a smaller competitor, has stated that it is hoping to return to Minneapolis in order to fight for a statewide solution in the state of Minnesota. Lyft has described the bill as “deeply flawed.”
Furthermore, this is in response to a Valentine’s Day demonstration by drivers for ridesharing and delivery services who were demanding equitable compensation and working conditions.
In order to wrap up a multi-year investigation into the companies, the New York Attorney General’s office stated in November that Uber will pay $290 million and Lyft would pay $38 million. The Attorney General’s office described this payment as the largest wage theft settlement in its history.
Last week, the Department of Labour and Industry of the state of Minnesota issued a research report stating that companies are highly unlikely to raise their prices to levels that would greatly diminish consumer demand and commissions.
The study also stated that such a scenario is highly improbable.
