Lyft, Stripe announce layoffs

California companies continue to prepare for anticipated recession

Lyft, Stripe announce layoffs

Two more California companies have joined the growing list of American employers reducing headcount ahead of an anticipated recession.

Lyft has announced it’s cutting 13% or about 700 of its just over 5,000 employees, CNBC reported.

Read more: How HR leaders should manage layoffs ahead of recession

In an email to employees, Lyft CEO Logan Green and Lyft President John Zimmer attributed the cuts to “a probable recession sometime in the next year” and rising rideshare insurance costs. The duo said that the layoffs “were based on deprioritized initiatives, an effort to reduce management layers, broader savings goals, and, in some cases, performance trajectory.”

The San Francisco-based company has promised impacted workers laid-off workers 10 weeks of pay, health care coverage through the end of April, accelerated equity vesting for the Nov. 20 vesting date and recruiting assistance. Workers who had been there for more than four years will get an extra four weeks of pay.

“We’re not immune to the realities of inflation and a slowing economy,” Green and Zimmer wrote. “We need 2023 to be a period where we can better execute without having to change plans in response to external events — and the tough reality is that today’s actions set us up to do that.”

Meanwhile, Stripe is trimming its workforce by about 14%, the company announced on its website.

The San Francisco-based financial infrastructure platform provider “overhired for the world we’re in,” Stripe CEO Patrick Collison told employees on Thursday. “In our view, we made two very consequential mistakes: We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” Collison wrote. “We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”

In addition to reducing headcount to nearly 7,000 (as it was in February), the company is “reining in all other sources of cost.” For example, Collison said, the recruiting department will be disproportionately affected because of fewer hires planned for next year.

Read more: Goldman Sachs Ayco VP: Don’t cut back on benefits ahead of recession

Collison said impacted employees will receive 14 weeks of severance (more for those with longer tenure), the scheduled 2022 bonus and the cash equivalent of six months of existing health care premiums or healthcare continuation. Additionally, laid off employees can cash out all unused PTO and the company will accelerate everyone who has already reached their one-year vesting cliff to the February 2023 vesting date. For those who haven’t reached their vesting cliffs, the cliff will be waived.

Stripe will also cover career and immigration support and create a new tier of extra-large Stripe discounts for anyone who decides to start a new business now or in the future. The company is also creating email addresses for everyone departing, and plans to roll this out to all former employees in the months ahead.

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