Major job losses at ride hailing firm Lyft, as it says it will axe 13 percent of its workforce – roughly 683 employees
Ride-hailing firm Lyft is to lay off 683 employees or 13 percent of its workforce, as it seeks to cut costs amid a weakening economic outlook.
Reuters reported the job losses, as consumer spending wanes amid the highest inflation in decades and rising interest rates, sees organisations across the world tightening their fiscal belts.
Lyft’s job cuts are expected to result in a charge of between $27 million and $32 million in the fourth quarter, Reuters reported. And it comes after 60 job were axed earlier this year, coupled with a hiring freeze in September.
Lyft is officially in its quiet period ahead of it reporting its third-quarter results on Monday, but according to Reuters the firm said the layoffs would not impact its previously issued forecast for the period.
The ride-hailing giant expects revenue of $1.04 billion to $1.06 billion and adjusted core profit of $55 million to $65 million.
The San Francisco, California-based company’s shares were down 1 percent after news of the layoffs was revealed.
“The announced reduction in force is a proactive step as part of the company’s annual planning,” Lyft was quoted as saying in a statement.
Lyft and its main rival Uber have for years been the poster child for the gig worker movement.
But California in 2020 implemented a law (known as AB5), which sought to reclassify ride-hail, food delivery and other app-based workers as employees that are entitled to benefits such as unemployment insurance and minimum wage.
Almost immediately after that ruling, Uber CEO Dara Khosrowshahi threatened to temporarily shut down Uber’s service in California.
The CEO of Lyft issued a similar warning.
Days later however, both Uber and Lyft were granted an emergency injunction by a court, so were able to continue operating as normal in California.
That injunction meant that drivers could continue working as independent contractors while the appeals court considered the question of driver status.
But in October 2020 the Appeal Court ruled that the ride-hailing firms must reclassify their drivers in California as employees.
In November 2020 however, voters in California approved Prop 22, that exempted companies such as Uber and Lyft from having to classify their workers as employees, allowing them to keep hiring drivers as ‘independent contractors.’
But lately the US Labor Department has proposed to limit the use of independent contractors, raising concerns this could drive up costs.
However experts believe that legal challenges and business groups lobbying for changes could derail the Biden administration’s efforts, Reuters reported.