Tag: gig workers
What about disclosure regarding gig workers?
When, in August 2020, the SEC adopted a new requirement to discuss human capital as part of an overhaul of Reg S-K, the SEC applied a “principles-based” approach, limiting the requirement to a “description of the registrant’s human capital resources, including the number of persons employed by the registrant, and any human capital measures or objectives that the registrant focuses on in managing the business (such as, depending on the nature of the registrant’s business and workforce, measures or objectives that address the development, attraction and retention of personnel).” At the time, SEC Commissioner Allison Herren Lee argued for a more balanced approach that would have included some prescriptive line-item disclosure requirements and provided more certainty in eliciting the type of disclosure that investors were seeking. (See this PubCo post.) Subsequent reporting has suggested that companies “capitalized on the fact that the new rule does not call for specific metrics,” as “[r]elatively few issuers provided meaningful numbers about their human capital, even when they had those numbers at hand.” (See this PubCo post.) Accordingly, Corp Fin is reportedly working on a proposal to enhance company disclosures regarding human capital management. Now, Senators Sherrod Brown and Mark Warner, the Chair and a member, respectively, of the Senate Committee on Banking, Housing, and Urban Affairs, have written a letter to SEC Chair Gary Gensler, calling on the SEC to include in its proposal a requirement that companies report about—not just employees—but also the number of workers who are not classified as full-time employees, including independent contractors. It may be a topic to keep in mind as companies prepare the disclosures for this proxy season.
SEC proposes a temporary trial to allow offerings of compensatory equity to certain gig workers
The term-end crunch continues! Yesterday, the SEC voted, without an open meeting, to issue two separate proposals to amend Rule 701 and Form S-8, both “substantially informed by public comment” received in response to the SEC’s July 2018 Concept Release on Compensatory Security Offerings and Sales. First, the SEC is proposing new amendments, on a temporary five-year trial basis, that would allow a company to provide equity compensation to a slice of “gig” workers—specifically only “platform workers” who provide services through the company’s technology-based platform—subject to percentage limits (no more than 15% of annual compensation), dollar limits (no more than $75,000 in three years) and other conditions. The proposal is structured as temporary to allow the SEC an opportunity to assess whether issuances are being made for legitimate compensatory purposes and not for capital-raising purposes, whether the issuances benefit companies, platform workers and other investors in the “gig economy,” and whether there are any unintended consequences. To help with that assessment, looking toward an evaluation of whether to make the rule permanent, the SEC will require participating companies to furnish certain information to the SEC at six-month intervals. Second, the SEC is also proposing amendments to Rule 701 and Form S-8 designed to modernize the framework for compensatory securities offerings in light of the significant evolution in compensatory offerings and composition of the workforce since the SEC last substantively amended those regulations. Both proposals will be open for public comment for 60 days.
Happy Thanksgiving!
You must be logged in to post a comment.