With their highly anticipated IPO today, Lyft is the first in a growing list of highly valued tech unicorns that have been eyeing the public market throughout the early part of 2019. On Friday the seven-year-old ride-hailing company went public at $87.24 a share with a valuation of $28 billion. It joins an exclusive club of disruptive companies — Airbnb, Uber, Slack and Pinterest — that have amassed huge sums of private capital with valuations never before seen on Wall Street.
As Lyft, Uber and other Silicon Valley companies have matured over the past decade, one of the many challenges they face has been how to manage a growing workforce of contract workers. Currently, Lyft has 1,600 full-time employees and 1.4 million contract drivers who have turned these side hustles into their full-time jobs. That large pool of independent contractors is expected to grow post-IPO, Lyft co-founders CEO Logan Green and president John Zimmer told CNBC’s Andrew Ross Sorkin on “Squawk Box” Friday morning.
Now the debate on whether independent contractor status helps or hurts them has widened.
That’s because they make an average of about $17.50 per hour and do not receive employee benefits. They’re not eligible for overtime or a minimum hourly wage, and under federal law they don’t have the right to unionize. Both Uber and Lyft have been under fire in the last few years for cutting their fares paid to drivers — most recently, an approximate 25 percent per-mile rate cut for Uber drivers.
Despite the efforts of these ride-sharing giants to put their best foot forward for potential investors, this past week alone saw contract drivers picketing over 2018 pay cuts outside a Lyft IPO roadshow event in San Francisco. But for these massive gig economy companies, protests and lawsuits over pay and labor practices are nothing new. Last year Uber agreed to pay a $20 million settlement over claims that drivers should be classified as employees, not contractors.