A new proposal pending at the U.S. Securities and Exchange Commission could throw ridesharing companies Uber and Lyft a bone in terms of payroll flexibility.
Reuters reports today that the agency is considering allowing these two companies to pay drivers up to 15% of their total compensation in equity.
Ostensibly, that would allow these workers to help their assets grow along with the company’s growth, but payment through equity is not universally appealing.
That’s not the only road block in play, as some SEC commissioners worry that such a move would unfavorably benefit the ridesharing companies at the expense of other firms in other sectors.
“Whatever the potential merits of equity compensation for alternative workers, the proposal does not establish a basis for selectively conferring a benefit on this particular business model,” wrote dissenting commissioners Allison Lee and Caroline Crenshaw, meaning, in plain English, that if Uber and Lyft are allowed to do this, other companies should be, too.
If Uber and Lyft do get the equity permission, it’s gravy on top of another big new win in California in the form of Proposition 22, which was on the ballot this past month.
Proposition 22 allows Uber and Lyft to classify workers as contractors instead of employees. Most economists believe that forcing the companies to declare workers as employees would generally put more money in the driver’s pocket.
Like Proposition 22, the equity proposal is controversial. Some drivers would like to be paid in stock – others would not. By the same token, some drivers would like to be classified as employees. Others worry that that will decrease the flexibility that has allowed them to make a living with side gigs or moonlighting or some other creative setup.
Regardless, these processes will tend to have an impact on the equity value of participating companies and possibly even others, so keep this development on your radar.
