Proposed Uber and Lyft rules will likely harm drivers, not help
Citing unsafe working conditions, low pay, and exploitation, DFL legislators are trying to pass a law (HF2369/SF2319) that will add new rules for ridesharing software companies like Uber and Lyft. Specifically, the proposed bill, among other things, requires:
- Uber and Lyft to pay a minimum rate to each driver per minute and mile
- Uber and Lyft to have a hearing for drivers before imposing any type of sanction, including deactivation
- Uber and Lyft to prevent discrimination on the basis of gender, race, and sexuality, among others.
- Uber and Lyft to provide payment information to drivers, including how much a customer has paid.
If the law passes, drivers would be able to sue these companies for failure to adhere to any of these provisions.
The bill’s primary sponsor in the House, Representative Hodan Hassan claimed during a Wednesday House floor discussion that Uber and Lyft drivers face unsafe working conditions, risks among which could include being spat on by a customer. Despite providing no evidence, she claimed that drivers could have their accounts unfairly deactivated due to customers discriminating against them (for something like their accent). In addition, despite drivers paying for everything (gas, car, insurance), they do not take the majority of what companies pay.
This bill then would remedy all these issues by providing protections to drivers and raising their pay. In fact, in a recent amendment, the bill would provide Uber and Lyft drivers the same protections as transit operators, giving harsher penalties to customers who commit crimes against them.
The problem with the bill
There is a problem with this type of reasoning, however. For one, Uber and Lyft are not transportation companies, as the bill defines them. They are digital platforms that allow drivers to connect with customers. Drivers are not employees of Uber or Lyft either. They are independent contractors who use Uber or Lyft’s platform to connect with riders.
By definition, independent contractors assume all the risks and costs associated with employment. That is not only true of Uber or Lyft drivers, but all other independent contractors. In return, they also do get to enjoy benefits not available in traditional employment — like flexibility. There is a tradeoff here that cannot be ignored.
By imposing such rules the Minnesota legislature will not only raise the cost of providing services for Uber and Lyft but also significantly change the nature of the working relationship between drivers and these platforms, which would negatively impact drivers and not help them.
Interestingly Representative Hassan said she made sure that the bill calls for lower minimum pay rates for Greater Minnesota because this will ensure that Uber and Lyft stay affordable for customers in Greater Minnesota, who often have longer commutes. So, it’s easy to assume that Representative Hassan is aware that these proposals will raise costs for customers. For some reason, however, she cannot go the extra step and rightly conclude that by raising prices for customers, the provisions would dry up business for drivers. So, instead of the minimum payment, they get zero. The same will happen if Uber limits its services or shut down, as it has warned.
There is no evidence that Uber drivers are somehow less safe than all other workers, or that they are discriminated against, or exploited. These companies also already provide drivers with information on pay and allow them to appeal unfounded deactivations.
This bill is trying to solve non-existent problems. And to the extent that it will increase pay for providers, it will do so by raising costs for customers, reducing job opportunities for drivers. According to Uber, if this bill passes, the Twin Cities will have some of the highest prices for rides in the country.
When crafting policy, results matter, not intentions. Laws intended to help workers more often than not end up doing more harm than good. When California passed AB5 to protect gig workers, for example, the law ended up costing gig workers their jobs.