Uber and Lyft are threatening to pull out of Minneapolis after a City Council vote there guaranteed a minimum hourly wage to drivers.
The council voted 10 to 3 on Thursday to override a mayoral veto of an ordinance that requires ride-hailing services to pay drivers a minimum rate of $1.40 per mile and 51 cents per minute to ensure that they earn the equivalent of local minimum wage of $15.57 per hour.
The wage ordinance was first approved last week, but was vetoed by Minneapolis’s mayor, Jacob Frey.
Both Uber and Lyft said they would stop operating in the city when the law takes effect on May 1. Uber added that it would leave the Minneapolis metro area, including the airport, making it the first metro area in the country without Uber’s presence.
The companies argued that they would be forced to pass the increased cost on to riders, which would result in drivers eventually earning less. In a statement, Lyft called the bill “deeply flawed,” adding, “this ordinance would make rides unaffordable for the majority of Minneapolis residents.”
The ordinance is the latest minimum wage law for gig economy workers, as tension grows between workers and gig companies over fair pay. In September, New York City required tech platforms like Uber, DoorDash and Grubhub to pay food delivery workers about $18 an hour. States including Washington and California as well as cities like Seattle have set minimum pay standards for gig workers over the years.
Critics of the Minneapolis bill include the mayor and Minnesota’s governor, Tim Walz, who vetoed a similar bill last year.
Supporters, such as City Council member Jamal Osman, who coauthored the law, said that ride-hailing services in Minneapolis rely heavily on drivers from the low-income or immigrant communities.
The companies are expected to push for a state bill that could overturn the Minneapolis ordinance. Last week, Minnesota state legislators proposed minimum pay standards for ride-hailing drivers at a rate slightly lower than what the city of Minneapolis approved.