Uber has actually seen its company cut by COVID-19.
Angela Lang/CNET
Uber is laying off 3,700 full-time workers, about 14% of its labor force, the ride-hailing business stated Wednesday in a filing with the United States Securities and Exchange Commission. The cuts are originating from Uber’s consumer assistance and recruiting groups, the business stated.
The layoffs belong to a strategy to minimize business expenses due to the “financial difficulties and unpredictability arising from the COVID-19 pandemic,” Uber stated. CEO Dara Khosrowshahi has actually likewise accepted waive his base pay for the rest of the year, according to the regulative filing.
“With people taking fewer trips, the unfortunate reality is that there isn’t enough work for many of our front-line customer support employees,” an Uber spokesperson stated in an emailed declaration. “Since we don’t know how long a recovery will take, we are taking steps to bring our costs in line with the size of our business today. This was a tough decision, but it is the right one to help protect the company’s long-term health and ensure we come out of this crisis stronger.”
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Uber has seen its core ride-hailing business significantly impacted by the novel coronavirus pandemic, even as the company has tried to expand offerings like Uber Eats and other delivery services. It’s also seen thousands of its drivers become infected with or exposed to COVID-19, the disease caused by the coronavirus. At least five Uber drivers have died from the virus.
The company said it’s been working to cut costs over the past couple of months in an attempt to avoid mass layoffs. It instituted a hiring freeze, reduced marketing expenses and temporarily shuttered Greenlight Hubs, which were in-person locales where Uber staff assisted drivers. As part of the layoffs, Uber said, it’s making some of those Greenlight Hub closures permanent, shutting down 40% of them around the world.
Uber rival Lyft also announced layoffs last week, letting go of nearly 1,000 employees, or 17% of its workforce. It too has experienced a significant financial hit during the crisis.
Since becoming public companies a year ago and before the coronavirus emptied city streets, both Uber and Lyft had already laid off staff. Lyft terminated roughly 90 people in January, and Uber let go of more than 1,000 employees in three rounds of cuts last fall.
The companies are also facing a lawsuit brought by the state of California that could cost them hundreds of millions of dollars in civil penalties. The state’s attorney general, Xavier Becerra, filed the lawsuit against the two ride-hailing companies on Tuesday, alleging they’ve violated state law AB 5, which aims to ensure workers have adequate labor protections by classifying them as employees.
Uber is scheduled to have an earnings call with investors on Thursday to discuss its first-quarter financial results. Analysts are expecting bleak news.
“Today’s cost cutting move ahead of tomorrow’s earnings is a painful, but unfortunately a necessary move,” Wedbush analysts wrote in a note on Wednesday. “On the other side of this dark valley, the Uber business model will likely look a lot different for the next few years (at least) and the company must rationalize costs and a smaller operation to focus on attaining profitability in this ‘new normal’ backdrop.”
