The US regulator proposes a pilot programme where companies can pay gig workers up to 15 per cent of their annual compensation in equity
The proposal does not require an increase in pay, but creates flexibility on whether companies can pay gig workers using cash or equity
The US securities regulator on Tuesday proposed a pilot programme to allow tech companies like Uber and Lyft to pay
up to 15 per cent of their annual compensation in equity rather than cash, a move it said was designed to reflect changes in the workforce.
The Securities and Exchange Commission (SEC) said internet-based companies may have the same incentives to offer equity compensation to gig workers as they do to employees. Until now, though, SEC rules have not allowed companies to pay gig workers in equity.
The proposal would not require an increase in pay, just create flexibility on whether to pay using cash or equity. It comes amid a fierce debate over the fast-growing gig economy, which labour activists complain exploits workers, depriving them of job security and traditional benefits like health care and paid holidays. The SEC’s Democratic commissioners said giving tech giants such flexibility would create an uneven playing field for other types of companies.
“Work relationships have evolved along with technology, and workers who participate in the gig economy have become increasingly important to the continued growth of the broader US economy,” said SEC Chairman Jay Clayton in a statement.
The proposed temporary rules would allow gig workers to participate in the growth of the companies their efforts support, he added, capped at 15 per cent of annual compensation or US$75,000 in three years.
Democratic SEC commissioners Allison Lee and Caroline Crenshaw opposed the move, saying alternative work arrangements, including independent contractors and freelancers, have existed for decades across a range of industries and it was not clear why tech companies should be singled out for special treatment.
“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,” they wrote in a statement.