Last year, when Minnesota\u2019s progressive politicians coalesced around a bill to raise the minimum pay for Uber and Lyft drivers in the state, their ostensibly left-of-center governor surprised them all by pulling a move he had yet to use while in office: he vetoed it<\/a>. <\/p>\n<\/div>\n Uber and Lyft were threatening to stop operating in Minnesota<\/a> if the bill was signed into law, and Governor Tim Walz was worried about losing a mode of transportation that many Minnesotans relied on. But he also didn\u2019t want to ostracize his progressive allies, many of whom have been laboring for years to force the multibillion-dollar ridehail companies to cough up a little more for their beleaguered drivers.<\/p>\n<\/div>\n Now that he\u2019s been catapulted to the national stage as Vice President Kamala Harris\u2019 running mate, it\u2019s worth reexamining how Walz navigated a tricky situation with two major tech companies and their progressive opponents \u2014\u00a0and how the ultimate solution left some major issues around the gig economy unaddressed. <\/p>\n<\/div>\n \u201cI think these workers, these drivers in the gig economy \u2014 we\u2019re looking at a brand new model of how things are done\u201d<\/p>\n<\/div>\n<\/div>\n \u201cI think these workers, these drivers in the gig economy \u2014 we\u2019re looking at a brand new model of how things are done,\u201d Walz told a local reporter in May 2023<\/a> after vetoing the initial legislation. \u201cThey\u2019re independent contractors and I think there\u2019s no doubt about it, there\u2019s got to be some protections. There\u2019s gotta be minimum wage, there\u2019s got to be protections on how they get deactivated. So I\u2019m in agreement with them. I don\u2019t believe the vehicle that passed the legislature at the very end was the vehicle to do that.\u201d<\/p>\n<\/div>\n Supporters of the bill expressed their disappointment. The Minnesota Uber\/Lyft Drivers Association said on X (then Twitter)<\/a>, \u201cIt is surprising that [Tim Walz] sides with corporates [sic] over poor drivers who campaigned and voted for him like he would be their savior.\u201d<\/p>\n<\/div>\n But their disappointment would be short-lived. A year later, Walz signed a bill into law<\/a> that would raise pay for drivers by an estimated 20 percent<\/a> while also providing a new type of insurance for injuries incurred on the job and making it harder for Uber and Lyft to deactivate drivers from their respective platforms. <\/p>\n<\/div>\n Walz proved deft at handling the issue, signaling to Uber and Lyft that he was willing to compromise while also keeping progressive groups at the table. He formed a working group that was tasked with gathering data on driver pay and corporate profits, among other elements. To be sure, the new law didn\u2019t raise driver pay as much as the original proposal \u2014 $1.28 per mile and 31 cents per minute, versus $1.40 per mile and 51 cents per minute. <\/p>\n<\/div>\n But it seemed to work. Uber and Lyft backed off their threat to leave the state. And Minnesota gained the distinction as only the second state in the US, after Washington state, to regulate rideshare driver pay through legislation. (New York\u2019s attorney general announced minimum pay rates for drivers as part of a settlement with Uber and Lyft last year.)<\/p>\n<\/div>\n Walz used the opportunity to tout his commitment to raising standards for working-class people while keeping transportation prices low for regular Minnesotans. \u201cThe idea that if you put in a hard day\u2019s work, you get paid a fair wage for it,\u201d he said at the bill signing ceremony on May 28th. \u201cThat at work you should be safe, you should be taken care of, and that we\u2019re providing a service that Minnesotans depend on.\u201d<\/p>\n<\/div>\n Minnesota gained the distinction as only the second state to regulate rideshare driver pay through legislation<\/p>\n<\/div>\n<\/div>\n The new law also requires Uber and Lyft to provide insurance to drivers that goes beyond what\u2019s already covered by their car insurance. (Drivers wanted insurance to cover injuries from assaults from riders, for example.) It also restricts how Uber and Lyft deactivate drivers from their platforms. <\/p>\n<\/div>\n But there are also some big pieces missing from the bill, such as anything that would require Uber and Lyft to classify its drivers as employees rather than independent contractors. Driver groups and labor organizers have been pushing states to reclassify drivers as employees so they can qualify for certain legal benefits, like minimum wage, overtime pay, unemployment insurance, worker\u2019s compensation, and paid sick leave. <\/p>\n<\/div>\n Uber and Lyft are extremely intent on keeping drivers as contractors. And Walz proved unwilling to tackle that particular issue, perhaps realizing that the courts would be the ultimate arbiters. <\/p>\n<\/div>\n Several courts have already weighed in on the debate, most notably in California, but Uber and Lyft have successfully beaten back such efforts through ballot initiatives. President Joe Biden\u2019s Labor Department announced a final rule earlier this year<\/a> that would make it harder to classify workers as independent contractors, effectively rescinding a Trump-era rule that would have relaxed those rules. But if Trump wins in November, those rules could swing back the other way. <\/p>\n<\/div>\n But there are also some big pieces missing from the bill<\/p>\n<\/div>\n<\/div>\n In the end, he got his deal, and Uber and Lyft vowed to stick around in Minnesota, mollifying concerns. It\u2019s unclear whether Walz\u2019s involvement in any way played a role in his selection as the vice presidential nominee. After all, the Harris campaign has its own ties to the ridehail industry<\/a>. Harris\u2019 brother-in-law and top advisor is Tony West<\/a>, who is also the general counsel at Uber. And the vice president recently hired David Plouffe<\/a>, a veteran of the Obama administration and a former vice president of strategy at Uber, to help run her presidential campaign. <\/p>\n<\/div>\n The deal won by Walz was not without its critics. Niko LeMieux, cofounder and COO of the Minnesota-based payments startup Easy Labs, criticized Walz for his dismissive attitude<\/a> toward smaller rideshare companies that wanted to fill the vacuum if Uber and Lyft followed through on their threat to leave the state. Walz called the idea that any new app company could replace the rideshare giants \u201cmagical thinking,\u201d but LeMieux argued that he was underselling the state\u2019s entrepreneurial spirit. <\/p>\n<\/div>\n But those criticisms were set aside when Harris announced Walz as her pick. Hours after the announcement, LeMieux posted a photo of himself on X<\/a> with his arm draped around the governor and a big smile on his face. After all, the past was in the past. And Walz was on his way to bigger things. <\/p>\n<\/div>\n<\/div>\n