SEC issues proposed rulemaking to give gig workers equity compensation

The Securities and Exchange Commission has issued rules that would allow public and private companies to offer equity compensation to gig workers.

The rule-making comes just weeks after California voters upheld an initiative that overturned legislation that would have classified gig workers as employees. The initiative replaced employment status with requirements that gig economy companies include an earnings guarantee of at least 120% of minimum wage while on the job, 30 cents per engaged miles for expenses, a healthcare stipend, occupational accident insurance for on-the-job injuries, protection against discrimination and sexual harassment and automobile accident and liability insurance, as TechCrunch reported. The earnings guarantees and reimbursement for expenses reflects a driver’s engaged time, not for the time spent between rides or deliveries.

Now the Securities and Exchange Commission is adding another potential perk, enabling companies to issue stock to gig employees as a form of compensation.

“As our economy and work arrangements evolve, we must be willing to experiment with concomitant changes to our regulations,” commissioners Elad Roisman and Hester Peirce wrote in a statement.

The proposed rules expand stock compensation for gig-workers for a five-year time period. During that time, stock issuers will give information to the Commission to assess the utility of the rules.

Those SEC guidelines also include certain protections to ensure that stocks issued to gig workers are compensation and not confused with fundraising.

These new rules are open to comment from platform workers, the SEC said.

Under the proposed guidelines, gig workers that provide services through a marketplace are eligible for stock compensation, not any consumers of those services. The commission is considering whether workers that sell goods could participate in the stock compensation program as well.

“The gig economy is here to stay. We are proposing to tweak one discrete area of our securities laws to allow the many Americans who engage in gig work because it provides a much-needed source of current income also build longer-term investments,” the commissioners wrote in their statement. “As our nation’s economy heals from the pandemic, many under- or un-employed individuals will be attracted to the flexibility and income opportunities that gig work can offer.  We view today’s proposal as a way to improve benefits for these important workers and to introduce them to the powerful role that our capital markets can play in building a nest egg for retirement and for passing along to the next generation.”