Thousands of Uber and Lyft drivers could be without jobs on May 1 if the companies follow through on their threats to end service in Minneapolis if minimum rates take effect as planned.
Uber has said it will shut down all operations in the Twin Cities metro area, where 95% of the state’s ride-app trips occur, while Lyft says it will continue operations outside of Minneapolis, including at the airport.
Normally when a business shuts down, workers are entitled to unemployment benefits of about half their average weekly earnings for up to 26 weeks.
The benefit is paid for through payroll taxes and allows workers to continue paying rent and other bills while they search for new jobs.
But Uber and Lyft drivers are treated as independent contractors. That means they don’t have to pay taxes that fund unemployment benefits, but also aren’t entitled to state help if they find themselves out of work through no fault of their own, a spokeswoman for the Minnesota Department of Employment and Economic Development confirmed to the Reformer.
“Self-employed individuals can elect to opt into UI coverage and pay the associated taxes, which may make them eligible for benefits. However, this is fairly uncommon,” DEED spokeswoman Mary Haugen wrote in an email.
For the 45% of Uber and Lyft drivers who average less than 10 hours on the apps per week, the economic hit of the companies pulling out is unlikely to be catastrophic.
They likely wouldn’t be eligible for unemployment anyway because workers are ineligible to receive benefits if they work less than 32 hours per week.
But a smaller group of committed drivers form the backbone of Uber and Lyft: About one-third of the more than 10,000 drivers on the two apps in Minnesota completed more than two-thirds of the trips in the state in 2022, according to a massive analysis commissioned by the state Department of Labor and Industry.
