Minnesota is one of several states actively working to restrict independent contracting opportunities. The state alleges these occupations invite rampant worker misclassification for both full-time freelancers and rideshare drivers.
A recent CBS News report claims gig workers, particularly those in the Twin Cities metropolitan region of Minnesota, are worse off and seeing decreased earnings. “In 2020, reported gig work earnings in the Twin Cities Metro were a little more than $17,800 a year. In 2022, they were about $10,500, or a 41% drop,” the report claimed.
According to ZipRecruiter, however, self-employed workers in the St. Paul area earn an average income of $30,125.
In May, the Minnesota legislature passed a bill to increase minimum wage earnings for Uber and Lyft rideshare drivers. But Governor Tim Walz (D-MN) vetoed the bill in May after Uber and Lyft threatened to pull out from the state.
In July, Attorney General Keith Ellison established a Task Force on Worker Misclassification to “create a more level playing field and a fairer economy, which helps all Minnesotans better afford their lives and live with dignity, safety, and respect.” The task force began meeting in September of this year.
In the same vein, Walz announced an executive order to establish a working group—the Governor’s Committee on the Compensation, Wellbeing and Fair Treatment of Transportation Network Company Drivers—to address “worker misclassification” among its various state goals.
He said rideshare companies like Uber and Lyft offer “a mix of both benefits and drawbacks for customers and drivers”—claiming drawbacks are due to drivers being “typically classified as independent contractors” who miss out on full benefits and perks. The working committee, as required by the executive order, must submit its findings to Governor Walz no later than January 1st, 2024.
As I noted at IWF and in the Washington Examiner, freelancing—especially for women—gives workers an edge:
Restricting 1099 work under the auspices of fighting worker misclassification would forcibly reclassify millions of women as employees. Seventy-nine percent of independent contractors prefer to maintain their independent status as contingent workers, according to the Bureau of Labor Statistics. Women who take on primary caregiver responsibilities, for instance, need flexibility to perform their duties and can’t operate in traditional settings. Female workers are also turning to the gig economy for greater income-earning potential.
Much to the chagrin of Minnesota regulators, rideshare drivers overwhelmingly identify as independent contractors and not employees. Uber and Lyft drivers have, instead, advocated for portable benefits as a means to insulate themselves from forced reclassification. Utah recently became the first state to pass this reform, while states like Massachusetts are mulling similar bills and will also have an opportunity to vote on a 2024 ballot measure to maintain their IC status.
Minnesota should study California Assembly Bill 5 and similar efforts that displaced workers and left them worse off under the guise of “fighting” misclassification.
To learn about fighting forced worker reclassification, go HERE.