MINNEAPOLIS, Minnesota — Rideshare companies Uber and Lyft said they will leave Minneapolis on May 1 if a new ordinance, passed by the city council, takes effect.
The ordinance gives drivers a mandated pay boost. To meet minimum wage levels in the city of Minneapolis, the new ordinance requires rideshare companies to pay rates of $1.40 per mile and 51 cents per minute. Uber and Lyft say fewer riders will now be able to afford the service, making operations unsustainable.
Meanwhile, Minnesota Republicans introduced a bill on Monday that would preempt cities from regulating rideshare company pay.
Governor Tim Walz said he's not a fan of preemption and wants all parties to come to the table to negotiate.
"No one is disputing these drivers need to make a decent living and it needs to be fair. Our study found out they aren't being paid enough. But it also found that there's a sweet spot in there where the rideshare companies can still continue to operate and folks can use that service. That's where we should end up," Gov. Walz said.
But several companies said they are ready to come in if Uber and Lyft make good on their promise.
Steve Wright, founder and CEO of Wridz, said their rideshare company can now be found in 20 cities across the country. But they started in Austin, Texas after Uber and Lyft left the city in 2016 under different circumstances. A new Texas law then eventually superseded the Austin ordinance, leading to Uber and Lyft returning a year later.
"I know in Austin 10 companies came in very quickly, filled the void, and I don't know that the city of Austin really felt that much of a difference. Now, of course, when the big companies came back in, they just started knocking off the mom and pops and kicking people out of the business more or less," Wright said. "But we did find we did fine with the companies that were here at the time."
With Wridz, drivers pay a monthly subscription of about $100. They then keep 100% of the fare. Wright said all their drivers receive face-to-face interviews and drug screening.
When asked if it was doable to be up and running by May 1, Wright said, "One-hundred percent from our side we could be ready. If we got the approval that we need from the city and from the state level, we could be in there in a matter of two weeks starting to onboard drivers."
But Wright said it's going to take a few companies to fill the void.
Joshua Sear, founder and CEO of Empower, said their main market is in the Washington, D.C., metro area. But they also provide service to drivers in Winston-Salem/Greensboro, North Carolina and are beta testing the service in New York City.
"Drivers using Empower in the D.C. area are providing about 60,000 rides a week currently," Sear said. "We're fully confident that should Uber and Lyft leave, there will be no interruption in the services with respect to ridehail services that are provided by drivers."
According to Sear, about 200 drivers have already signed up saying they are interested in the software if Empower ends up servicing Minneapolis.
Sear said they are a software company, only providing the technology through a subscription. Drivers work for themselves and keep 100% of the fare.
"We're not a regulatory body. We sell software just like OpenTable sells software to restaurants," Sear said.
But Sear added, "I think there's a lot of things that we can do and tools that we will provide to drivers that will help facilitate any regulatory bodies' ability to oversee and regulate those individual drivers."
In November of 2020, D.C. officials issued a cease and desist letter saying Empower was not authorized to operate in the District. Empower founder Sear said that cease and desist order was overturned by the D.C. Court of Appeals within the past month. Court documents state, "We uphold OAH’s (Office of Administrative Hearings) determination that Empower is a private vehicle-for-hire company subject to DFHV’s (D.C. Department of For-Hire Vehicles) regulation, but we reverse OAH’s order upholding the cease-and-desist order."
City of Minneapolis Spokesperson Casper Hill said Empower would need to get licensed in order for drivers, who use their technology, to operate within the city.
According to Hill, the Minneapolis-based company Pikkapp recently contacted the city about a transportation network company license. KARE 11 reached out to Pikkapp and is waiting to hear back.
To date, no new company has submitted an application for a TNC license. Once the city of Minneapolis receives a license application from a TNC, it takes approximately two to six weeks for approval. Hill said any new companies will need to follow the city's permit and licensing process.
Editor's note: This story originally stated that the cease and desist order against Empower was issued in Dec. of 2023. Founder and CEO Joshua Sear says it was issued in November of 2020, and overturned by the Washington D.C. Court of Appeals in early March of 2024.
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