SEC Proposes Temporary Rules to Facilitate Participation by "Platform Workers" in Compensatory Offerings Under Rule 701 and Form S-8

Just before the Thanksgiving holiday, the SEC proposed rules that, on a temporary basis (for five years) and subject to percentage limits (no more than 15% of annual compensation), dollar limits (no more than $75,000 in three years) and other conditions, would allow issuers to provide equity compensation to "platform workers" (such as Uber or Lyft drivers, Instacart delivery providers, or sellers on auction websites) or others who provide services available through an issuer's technology-based platform or system. 

In order to evaluate how the proposed expanded scope of these rules is working, the proposed amendments would require an issuer that sells securities to platform workers to furnish certain information to the SEC at six-month intervals. The SEC will use the five year period to determine (1) whether issuances of securities to platform workers are being made for legitimate compensatory purposes, and not for capital-raising purposes, and (2) whether such issuances have the expected beneficial effects for issuers in the "gig economy" and their investors, including those platform workers who have received securities as compensation, and whether such issuances have resulted in any unintended consequences. These assessments, in turn, should help the Commission determine whether to modify or expand the scope of these rules on an extended or permanent basis.

The proposed rules will be subject to a 60-day public comment period.