Your company may pay someone who is not on your payroll to move the needle, such as a rideshare driver delivering your product, a social-media influencer wearing your brand, or a gig worker staffing your marketplace. You may even want to give that person a stake in the company’s success, but the federal securities rules that govern compensatory equity were written for a world where “worker” meant “employee,” and updating them has proved more difficult than expected.

On November 24, 2020, the SEC proposed temporary rules that would have expanded Rule 701 and Form S-8 to cover “platform workers.”[1] The proposal was never adopted. Six years later, companies are wondering whether granting equity to influencers and brand ambassadors is permissible, or whether to structure the grant arrangements into existing “consultant” or “advisor” categories. This article examines the unfinished regulatory framework, real-world practice, and the enforcement trap that catches the unwary. READ MORE