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Big tech threw $200m at a ballot measure to hurt gig economy workers. And they won | Ross Barkan | Opinion

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One of the darker outcomes of 21st-century work life has been the predatory gig economy. Divorced from healthcare benefits and regular pay, millions of workers are told they are supposed to be lucky to drive passengers around in a car for ever-diminishing returns.

Last week, there was hope that Proposition 22, a ballot measure that allows gig economy companies to continue treating drivers as independent contractors, would be defeated in California, an increasingly progressive state. But voters passed the measure overwhelmingly, thanks to obscene amounts of spending by Uber, Lyft, Seamless and DoorDash. Unleashing more than $200m – 10 times the amount of the proposition’s opponents, like labor unions – the coalition of tech giants easily drowned out those fighting for the rights of workers.

The sum is titanic. Uber and its allies left nothing to chance. Reaping billions in investment capital, the companies could easily deploy the cash to crush those advocating on behalf of their workforce.

With Proposition 22’s passage, the underclass of these tech giants will remain overworked and underpaid, denied the benefits of full-time employees. They will continue to dwell in precarity, unable to access unemployment insurance, paid family leave or healthcare during a pandemic.

The vote will probably have a nationwide impact, since it rejected the principles outlined in a 2018 state supreme court ruling and enshrined in a 2019 state law that said workers who performed tasks within a company’s regular business must be treated as employees. Now gig workers are exempted from these rules and can continue to work independently.

This is a pernicious new era of capitalism, in which companies can brutally exploit their workers without ever turning a profit. Old-world giants, like General Motors, at least needed to make money to survive.

The Uber business model is Trumpian. Storming into cities across the world and openly flouting local regulations, Uber burns up investor cash, winning through sheer ubiquity. Uber loses money every year but devours the market, offering artificially cheap transportation while driving rivals, like taxi drivers, to suicide. There is no way to compete with a company that is allowed to thrive while losing money. Uber can continually discount its rides, confident new capital will arrive to prop it up forever.

In fact, Uber’s survival depends on not classifying its drivers as full-time employees. That would make them a conventional company, subject to certain laws of gravity. Workers can be costly; they make demands, after all.

Had Proposition 22 failed, Uber, with its multibillion-dollar valuation, would have been forced to redirect its capital into the pockets of its workers. This, in the long run, would be unacceptable, depriving its wealthy benefactors and executives of their unreality.

In a sane society, a company could not habitually lose money, punish its workers and keep functioning. Uber can.

For much of the 2010s, gig companies coasted on the goodwill of the public. Blissfully unaware of how their goods were rendered so cheaply, most consumers and politicians celebrated the rise of Uber, Lyft and their brethren.

The outcome of this measure should not be treated as a referendum on big tech – not with such an absurd spending disparity. Give a labor union $200m to counter propaganda, and a vote total could be flipped. The outcome does, however, serve as a warning to the left that these rapacious companies will do anything and everything to protect their unnatural advantage in the marketplace.

Uber and its ilk treat workers as expendable assets. Having won in California, they will seek devastating victories elsewhere. It will be up to other states, even Congress, to somehow bring these companies to heel. This is the fight that must be joined.

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SEC Proposes to Permit Offerings of Equity Compensation to Gig Economy Workers

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The SEC has proposed amendments that would permit, for a temporary five-year trial period, companies to offer equity compensation to “platform workers” (gig economy workers who provide services by means of an internet or other technology based marketplace platform) under the same regulatory framework available for offerings to employees (available here). The amendments would expand Rule 701 (by which non-reporting companies may issue equity-based compensation without a registration statement) by adding a new subsection, Rule 701(h), and Form S-8 (by which reporting companies issue equity-based compensation) by adding a new General Instruction A.1.(b), to permit these offerings.

The proposed changes would be effective for five years, in order to allow the SEC to assess the impact of these changes in light of the evolving gig economy and to assess whether the issuances are being made for appropriate compensatory purposes rather than capital raising purposes. The proposed amendments take into account comment letters received in response to the SEC’s July 2018 Concept Release, in which it sought input on the ways to modernize Rule 701 and Form S-8. The proposed changes are particularly timely, as the COVID-19 pandemic, shutdowns and “work at home” orders continue to cause a re-thinking of, and evolution away from, the traditional model of a brick and mortar office-based work place.

The SEC noted that these proposed amendments are meant to address solely “considerations relevant to the U.S. Federal securities laws.” To that end, the SEC stated that it is not expressing any opinion on whether platform workers should or would be considered “employees” for the purposes of other laws or regulations.[1]

In a separate but simultaneous release, the SEC proposed amendments to more generally modernize and simplify the requirements of Rule 701 and Form S-8. For our summary of these proposed changes, please see our separate client alert, “SEC Proposes Amendments to Rule 701 and Form S-8.”

Eligible Workers

Under the proposed changes, to be eligible, platform workers must provide bona fide services through or by means of the issuer’s internet-based or other widespread, technology-based marketplace platform or system (a “platform”). Additionally:

  • workers must be unaffiliated with the issuer;
  • workers providing services to third-party end users would qualify, so long as the issuer benefits (g., by receiving a fee or percentage of compensation);
  • consistent with the existing provisions of Rule 701 and Form S-8, platform workers providing services to the issuer, its subsidiaries, its parents and subsidiaries of its parent would be eligible;
  • issuances may be made to an entity, if (i) substantially all of the entity’s activities involve the performance of bona fide services provided through a platform, and (ii) it is wholly and directly owned by the natural person actually performing the services; and
  • consistent with the separately proposed amendments to Rule 701 and Form S-8, former employees and former employees of acquired entities would be eligible for issuances under certain circumstances.

Eligible Services

The provision of certain services would not be eligible for issuances under these expanded rules – services in connection with capital-raising or with promoting or maintaining a market for the issuer’s securities would not qualify, nor would the use of a platform for the sale or transfer of permanent ownership of discrete, tangible goods (e.g., a platform that provided for the permanent transfer of real estate would not be eligible, whereas a platform that provided for the temporary rental of real estate would be).

The services would need to be provided pursuant to a written contract or agreement between the issuer and the platform worker and must be provided through a platform that the issuer operates and controls. In order to demonstrate that it controls the platform, an issuer would need to be able to show that it: (i) provides access and establishes the principal terms of service, (ii) establishes the terms and conditions by which the platform worker receives payment for services and (iii) has the authority to accept and remove platform workers providing services.

Conditions for Issuances

Any issuances would need to be made pursuant to a compensatory arrangement that is evidenced by a written compensation plan, contract or agreement between the issuer and the platform worker. To ensure that the securities are issued/received for compensatory and not speculative purposes, the SEC has additionally proposed that:

  • the amount and terms of securities issued to platform workers could not be subject to individual bargaining, nor could platform workers be permitted to elect between payment in securities or cash;
  • a platform worker could receive no more than 15% of their compensation in any 12-month period, and no more than $75,000 in any 36-month period, in securities issued pursuant to Rule 701 or registered on Form S-8; and
  • any issuances made under Rule 701 would be subject to enhanced transfer restrictions – issuers would need to take steps to ensure that these securities would be transferrable only to the issuer or by operation of law.

In order to enable the SEC to assess the use and impact of this temporary expansion, the SEC would require issuers who elect to issue securities to platform workers under Rule 701 or Form S-8 to furnish to the SEC, in a non-public manner (e.g, this information would not be filed or furnished publicly via EDGAR), the following information regarding these issuances at six-month intervals (commencing six-months after the first issuance):

  • the criteria used to determine eligibility for securities awards to platform workers, whether they are the same as for other compensatory transactions, and whether those criteria are communicated to workers in advance as an incentive;
  • the type and terms of securities issued to platform workers during the prior six months, and whether they are the same as for other compensatory issuances in that interval;
  • if issued pursuant to Rule 701, the steps taken to ensure that the securities are non-transferable;
  • the percentage of overall outstanding securities that issuances to platform workers represents;
  • during the interval, the number of platform workers and the number of non-platform workers the issuer has, and the number of platform workers and non-platform workers who received securities; and
  • the number and dollar amount of securities issued to platform workers, both in absolute amounts and as a percentage of total sales under Rule 701 and/or Form S-8, as applicable.

Issuances Treated Like Other Rule 701 Issuances

Similar to other issuances pursuant to Rule 701, these issuances would be excluded from the calculation of outstanding securities under Rule 12g5-1 (e.g., to calculate whether an issuer must register a class of equity securities under Section 12(g)(1)).

Securities sold to platform workers would be included when calculating the amount of securities offered by the issuer, both for determining the maximum threshold amount issuable under Rule 701 and for determining the applicable disclosure requirements of Rule 701(e).

Comment Period

The SEC has requested comments on the proposal within 60 days of the date of its publication in the Federal Register.

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Portable benefits are the future of the gig economy

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The decisive win for Proposition 22 in California on November 3 shows a likely majority of voters—even in the most progressive states—see the value of flexible work that allows people to generate income on demand. That value has only grown amid an ongoing economic crisis that has hammered employment in nearly every industry in New York and left thousands searching for immediate opportunities to earn income.

Rather than repeat California’s tumultuous past year, New York’s leaders should learn from it and deliver what voters are asking for: a bold plan to ensure that independent workers in all sectors can access universal, portable benefits, gaining financial security without losing flexible work.

It was just over a year ago that California passed Assembly Bill 5 into law, which established strict guidance on classifying workers as independent contractors and challenged the ability of app-based platforms to operate. California’s new ballot measure reverses course, allowing app-based drivers to work as independent contractors while extending a range of benefits—and earning the support of workers, tech companies, and voters.

In New York and across the nation, the problem has grown increasingly clear. Far too many workers in the gig economy live in a state of perpetual financial precarity. Few have access to the benefits that typically flow from full-time employment — including health care, worker’s compensation, paid leave, life insurance, retirement savings, and more.

The result is an unacceptable level of risk for workers and their families, and the potential for the further erosion of the middle class.

But faced with so many obstacles to an inclusive economic recovery, tackling this challenge shouldn’t require a knock-down, drag-out fight. Instead, New York policymakers should bring together workers and industry to establish a universal system of portable benefits for the future workforce.

This system would allow New Yorkers to tap into the flexible, income-generating opportunities that gig platforms are providing — even amid a major economic downturn — while ensuring that independent workers have the financial security to thrive.

Under this system, benefits from health care to retirement accounts would move with independent workers from job to job. Freelancers, gig economy workers, and other independent contractors would have the ability to access a wide range of benefits through a regulated exchange, including offerings from established companies, nonprofit organizations, unions, start-ups, and government. As is the case in Oregon and California, employers and platform companies should make substantial financial contributions to at least some of these benefits.

To ensure that lower-wage workers are equally supported, legislators could levy a small surcharge on services rendered through app-based platforms—similar to New York’s current Black Car Fund—with the revenue used to cover any employee contributions to portable benefits for lower-income workers.

New York policymakers are not alone. Recent initiatives in Oregon, Colorado, Washington, and Philadelphia demonstrate growing support for the portable benefits framework—with Oregon’s approach showing particular promise.

Now New York has the opportunity to fit all of these pieces together into a visionary, integrated system: taking decisive action to rebuild a more inclusive economy while gaining a major competitive advantage over other states where the future of independent work is in doubt.

As California’s experience with AB 5 and now Proposition 22 makes clear, the most effective path forward is to create systems that support the financial security of independent workers — not limit their existence.

Winston C. Fisher is co-chair of New York City’s Regional Economic Development Council. Eli Dvorkin is the editorial and policy director for the New York City-based Center for an Urban Future.

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Comprehensive Report on Gig Economy and Sharing Economy Market 2020 | Size, Growth, Demand, Opportunities & Forecast To 2026

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Gig Economy and Sharing Economy Market research report is the new statistical data source added by A2Z Market Research.

“Gig Economy and Sharing Economy Market is growing at a High CAGR during the forecast period 2020-2026. The increasing interest of the individuals in this industry is that the major reason for the expansion of this market”.

Gig Economy and Sharing Economy Market research is an intelligence report with meticulous efforts undertaken to study the right and valuable information. The data which has been looked upon is done considering both, the existing top players and the upcoming competitors. Business strategies of the key players and the new entering market industries are studied in detail. Well explained SWOT analysis, revenue share and contact information are shared in this report analysis.

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Top Key Players Profiled in this report are: 

Couchsurfing, Lyft, Uber, Door Dash, Airbnb, Uber, Postmates, GoGoGrandparent, BlaBlaCar, Airbnb, Upwork, Task Rabbit, Fiverr, Lyft, SilverNest, Zipcar, Rover

The key questions answered in this report:

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Various factors are responsible for the market’s growth trajectory, which are studied at length in the report. In addition, the report lists down the restraints that are posing threat to the global Gig Economy and Sharing Economy market. It also gauges the bargaining power of suppliers and buyers, threat from new entrants and product substitute, and the degree of competition prevailing in the market. The influence of the latest government guidelines is also analyzed in detail in the report. It studies the Gig Economy and Sharing Economy market’s trajectory between forecast periods.

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Global Gig Economy and Sharing Economy Market Segmentation:

Market Segmentation by Type:

Gig Economy
Sharing Economy

Market Segmentation by Application:

Shared private car
Shared private residence
Independent contractor
Freelancers

Regions Covered in the Global Gig Economy and Sharing Economy Market Report 2020:
• The Middle East and Africa (GCC Countries and Egypt)
• North America (the United States, Mexico, and Canada)
• South America (Brazil etc.)
• Europe (Turkey, Germany, Russia UK, Italy, France, etc.)
• Asia-Pacific (Vietnam, China, Malaysia, Japan, Philippines, Korea, Thailand, India, Indonesia, and Australia)

The report provides insights on the following pointers:

  1. Market Penetration: Comprehensive information on the product portfolios of the top players in the Gig Economy and Sharing Economy market.
  2. Product Development/Innovation: Detailed insights on the upcoming technologies, R&D activities, and product launches in the market.
  3. Competitive Assessment: In-depth assessment of the market strategies, geographic and business segments of the leading players in the market.
  4. Market Development: Comprehensive information about emerging markets. This report analyzes the market for various segments across geographies.
  5. Market Diversification: Exhaustive information about new products, untapped geographies, recent developments, and investments in the Gig Economy and Sharing Economy market.

Table of Contents

Global Gig Economy and Sharing Economy Market Research Report 2020 – 2026

Chapter 1 Gig Economy and Sharing Economy Market Overview

Chapter 2 Global Economic Impact on Industry

Chapter 3 Global Market Competition by Manufacturers

Chapter 4 Global Production, Revenue (Value) by Region

Chapter 5 Global Supply (Production), Consumption, Export, Import by Regions

Chapter 6 Global Production, Revenue (Value), Price Trend by Type

Chapter 7 Global Market Analysis by Application

Chapter 8 Manufacturing Cost Analysis

Chapter 9 Industrial Chain, Sourcing Strategy and Downstream Buyers

Chapter 10 Marketing Strategy Analysis, Distributors/Traders

Chapter 11 Market Effect Factors Analysis

Chapter 12 Global Gig Economy and Sharing Economy Market Forecast

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