Uber and Lyft are reportedly planning to give some of their drivers cash bonuses, with the intention that these drivers could then use the money to buy shares in each firm's upcoming IPOs, a new report from The Wall Street Journal .
It's a complicated workaround for a unique problem faced by carpool companies that can not give their drivers a stock, because the Securities and Exchange Commission has no rules on private equity stock to contractors who are not technically considered full-time employees under the law. And although the SEC has been asked by companies to change this rule or not, it is unlikely that these changes would be timely, even with the support of Uber, Lyft and Airbnb.
By granting cash bonuses to drivers who have the option of converting stocks into stocks, drivers can easily keep the money. Uber and Lyft give drivers the opportunity to invest in this asset (and a portion of the gain, if any, at IPO prices without directly offering them shares.
The two programs vary from company to company Lyft (who plans to go public in March) has the simpler plan for the two, and drivers who have completed 1
Uber (whose IPO is expected shortly after Lyft's said) will allegedly invest hundreds of millions of dollars in the program, which would help " A significant portion of "the driver is either a pure cash bonus or the chance to set these prices on the purchase of shares at the initial public offering price Depending on how long a driver has worked with Uber, and how many trips he has made, although it is not yet known how much money a single driver can expect.
The fact that Ride Share riders are not considered full-time employees has been a controversial debate in recent years. Stock options were just one of the upcoming topics. Several lawsuits have tried to classify the drivers as full-time workers, although the courts have largely preferred Uber and Lyft to keep the drivers as independent contractors for the time being. However, there have been other positive effects – Uber, for example, has begun to introduce a program that offers rewards to motorists, including free tuition and higher revenue.
Lyft declined to comment when asked about the new program; Uber had not responded to a request for comments at the time of publication.