Are you in a business with a tight job market and looking for a new benefit to attract new bodies or even lure them away from the competition? Have you tried education benefits? They’re hot and getting hotter.
The latest employer to hop on the education bandwagon: Lyft, which finds itself in an ongoing and vicious battle for drivers with Uber and other transportation services. It just announced its offering drivers tuition discounts as part of a pilot program to see if benefits will bind drivers closer to Lyft.
It’s part of the evolution of the “gig economy” in which more people are seeking independence from a traditional day job. Many Lyft drivers also drive for Uber and even more conventional taxi services, playing both sides against the middle to find the sweet spot in their freelance career.
The downside: No benies. While Obamacare’s affordable health insurance freed many from the staff job life, no one is likely to turn down a freely offered benefit. And, the thinking on the corporate side goes, if we can bind them more closely to our side, maybe we can get them to quit working for the competition.
Lyft’s approach is tailored toward workers who want to build a new career but lack the educational credentials to get out from behind the Lyft wheel. By offering discounted general education degrees for those who haven’t completed high school, and online college courses to others, Lyft is betting it can hang on to its more motivated drivers a bit longer and buy some loyalty at the same time.
Meanwhile, across the pond, Uber is also experimenting with benefits for its gig workers. Drivers for its Uber Eats announced that starting next year, it will offer an insurance package for all of its European couriers in Austria, Belgium, Italy, Netherlands, Poland, Portugal, Spain, Sweden and Britain. that included persoanl accident coverage, and cash payments for hospitalization, property damage and third-party injuries.
Lyft, reports online news source KUOW FM, is partnering with Denver start-up Guild Education, which offers courses to workers through online nonprofit schools. The discounts are hardly full rides: the tuition discounts range from 5 percent to 20 percent. But, Lyft told KUOW, annual tuition savings from the discounts can top $4,000.
With Lyft, Uber and similar services struggling to find enough drivers, and with drivers frequently working for more than one of them, the pilot program represents another twist in the playing of the gig economy. Companies in competitive markets may be forced to treat their contractors more like employees if they want to survive.
Subsidizing educational costs is nothing new; many employers offer tuition discounts and other forms of subsidies for employees trying to get ahead. In the healthcare field, where shortages of many types of healthcare professions are becoming severe, more employers are offering to pay down or pay off student loans in order to attract the people they need.
But benefits for freelancers is new ground, one that could lead to trouble for Lyft if it makes their workers look like employees instead of independent contractors to the Internal Revenue Service. Lyft told KUOW that its in-house lawyers said the benefit didn’t affect workers’ status, because the benefit isn’t compensation but a subsidy. However, there are no doubt one or two government lawyers somewhere giving that argument a test drive.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
