Last year, drivers for ride-hailing apps like Uber and Lyft were excited about a new competing app, Juno, which promised to grant drivers stock in the company along with lower commissions and in-app tipping. Juno was recently acquired by yet another service, Gett, and the drivers have seen their equity evaporate, leading them to file a complaint with federal regulators.
The plan for Juno was to share more revenue with its drivers than rivals do. Retaining drivers is important, as it cuts down on costly expenses associated with recruiting new drivers, like referral fees and sign-on bonuses.
A source familiar with the startup’s finances told Bloomberg Technology that Juno was profitable, but unable to convince investors to help it expand to more cities. Instead, the company decided to pursue a deal with Gett, a ride-hailing app out of Israel which operates in multiple cities, including New York.
Drivers acquired theoretical equity in Juno the more that they drove, and the plan was that drivers would own about half of the company by 2026. Gett, which paid $200 million to acquire Juno, has no such equity plan, which meant the end of the stock program.
Drivers learned in an email that they would receive a small cash payment, about 10% of what drivers had been told their accumulated stock was worth.
That’s where the Independent Drivers Guild, a group that’s not a union but represents New York City’s drivers with Uber, comes in. To maximize their time and income, drivers for ride-hailing apps often work for multiple services at once, accepting passengers as they come in. According to the group, 40% of its members also drive for Juno.
While the Independent Drivers Guild represents drivers for Uber in New York City, its members often drive for Juno as well. Yet Uber pays some of the group’s administrative expenses, which makes it a little awkward when the IDG is calling for the Federal Trade Commission to investigate one of Uber’s competitors.
Uber itself Uber paid $20 million to settle charges that it misled prospective drivers about what their pay would be.
In its letter to the FTC [PDF], the IDG says that it learned from mysterious “sources” that Juno had learned from the Securities and Exchange Commission that its stock plan may be illegal. Yet, the IDG alleges, that was a few months before the deal, and the company still used the idea of earning equity in the company to appeal to new drivers.
“Many IDG drivers have no access to traditional worker protections like retirement plans, group health insurance, or even paid time off,” the IDG notes in its letter. “The promise of a stake in the company attracted thousands of drivers seeking financial security for their families.”
The group also sent the letter to New York state’s attorney general, New York City’s Office of Labor Policy and Standards, Juno, and Gett.
by Laura Northrup via Consumerist