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Key Takeaways
- Uber and Lyft said they will end operations in Minneapolis on May 1 because the companies will not pay the wages required under a new law.
- The city council approved a plan Thursday regulating how drivers get paid, which supporters said would ensure rideshare drivers are paid the equivalent of the city’s $15.57 per hour minimum wage.
- The companies argued the decision would impact thousands of its workers in the city.
Don’t expect to get a ride from Uber ( UBER ) or Lyft ( LYFT ) cars in Minneapolis after May 1.
Both major rideshare companies announced they will discontinue operations in the city after the Minneapolis city council passed regulations requiring a $5 minimum per ride, a rate of $1.40 per mile and 51 cents per minute and other wager requirements for rideshare drivers, according to the Star Tribune in Minneapolis. Supporters said the requirements would ensure rideshare drivers are paid the equivalent of the city’s $15.57 per hour minimum wage.
Uber said in an emailed statement to Investopedia that it was “disappointed” with the decision, arguing that the council chose to “ignore the data and kick Uber out of the Twin Cities.” The company added this will put 10,000 people out of work and leave many stranded.
For its part, Lyft said the legislation was “deeply flawed,” in an emailed statement. The company said “thousands of drivers who rely on Lyft for earnings would ultimately make less,” and the regulations would create an unsustainable situation for its customers.
Lyft said it would continue to advocate for a “statewide solution in Minnesota that balances the needs of riders and drivers,” and hopes to return to the city as soon as possible.
Councilman Jamal Osman, who co-authored the policy, said the regulation will ensure drivers aren’t exploited for cheap labor.
“Drivers are human beings with families, and they deserve dignified minimum wages like all other workers,” he wrote on social media platform X.
Shares of both Uber Technologies and Lyft lost ground in Friday’s session.