Lyft plans to cut 17% of its workforce in one of the largest layoff rounds for a tech company during the coronavirus pandemic.
The San Francisco ride-hailing company said in an SEC filing Wednesday that it will shed 982 jobs to cut costs as demand for rides has plummeted. The company will also furlough 288 employees and reduce pay for many remaining employees, among other measures.
“It is now clear that the COVID-19 crisis is going to have broad-reaching implications for the economy, which impacts our business,” Lyft CEO Logan Green said in a statement. “We have therefore made the difficult decision to reduce the size of our team. Our guiding principle for decision-making right now is to ensure we emerge from the crisis in the strongest possible position to achieve the company’s mission.”
Green and cofounder John Zimmer had previously said they will donate their salaries through the end of June to driver relief efforts.
Lyft’s new pay cuts apply to base salaries for exempt employees for 12 weeks starting in May. Pay for executives will be cut 30%; that for vice presidents will be cut 20% and pay for all other exempt employees will be cut 10%. Members of the board of directors agreed to forgo 30% of their cash compensation for the second quarter.
Lyft said it expects $28 million to $36 million in restructuring costs, such as severance and benefits, mostly incurred in the second quarter. The company is headquartered in San Francisco’s China Basin office complex.
The move comes a day after bigger rival Uber was said to be considering layoffs of 20% of its workforce, about 5,400 staffers.
Neither Lyft nor Uber has ever made money. Both companies went public a year ago and have disappointed investors.
Since the shelter-in-place orders, use of ride-hailing has declined precipitously.
A Chronicle analysis of consumer spending data from Second Measure, which analyzes billions of anonymized credit card, debit card and bank transactions to track sales at individual merchants, showed that the ride business for both Lyft and Uber was down 90% compared with a year ago in San Francisco and four neighboring counties (San Mateo, Marin, Alameda and Contra Costa). Nationwide, Lyft’s rides were down 89%, while Uber’s were down 85%.
Uber and Lyft drivers, whom the companies consider to be independent contractors, have seen their incomes plummet during shelter in place. Both companies are trying to help drivers find other opportunities with the booming delivery services and by subsidizing some rides and deliveries related to pandemic relief to provide some earning opportunities.
Lyft and Uber each has contributed $30 million to a $110 million ballot campaign to exempt drivers from California’s AB5 gig-work law, which could turn them into employees, adding up to 30% to the companies’ labor costs. The measure campaign said in February that it had collected more than 1 million signatures seeking to qualify for the November ballot. It would keep drivers and couriers as independent contractors, while allowing them to have some earnings guarantees and some benefits.
Ride-hail drivers and other gig workers have called attention to their lack of sick pay and health benefits because of their independent-contractor status. Uber and Lyft have offered some pay to drivers who are diagnosed with COVID-19 or forced to quarantine because of exposure to the virus, though those benefits are not as extensive as those offered employees, critics have said.
I am a Talent Planning, Acquisition/Recruiting and Brand Management professional with 10 years experience. My appreciation for effective communication and passion for brand awareness and authenticity are what drive me to approach all that I do with a fresh perspective and an openness to new ideas. I have a passion for building strategic teams and empowering those around me to drive for results.
I am incredibly passionate about speaking to young women about being the best they can be. Empowering other women to be successful is something I work to do everyday, with both my team and with students that I meet.