SEC Proposes Changes to Equity Compensation Rules for Gig Workers

The Securities and Exchange Commission has proposed including workers within the gig economy, who do not have a traditional employment relationship with a company, in the potential changes to Rule 701, which offers exception “for offers and sales of securities by a private company under a written compensatory benefit plan or written compensation contract for employees, directors and consultants, among others.”

This expansion is temporary, expiring in 2026, but would allow issuers to offer compensatory securities to gig workers.

A few limitations include:

  • No more than 15% or $75,000 of compensation during a 3-year period can be securities
  • Securities offered must be following a written agreement and not for capital-raising purposes
  • The amount and the terms of the securities offered can’t be dependent on bargaining or the option to choose between securities and cash
  • Issuers have to ensure securities won’t be transferred illegally
  • Only workers providing services over qualified platforms, and not platforms used for the sale of goods are included