🟦🚨 Revel's WARN Layoff Notice Lists 791 Remaining W2 Drivers
Revel's NYS layoff notice lists 791 W2 drivers. In Jan 2024, Revel employed ~1,500 W2 drivers. 1099 business model pivot was reaction to recruitment issues & (we believe) fundraising considerations
Revel posted its required New York State WARN layoff notice, listing 791 affected workers (out of a total 791 employees), implying vast majority of (if not all) layoffs relate to remaining W2 driver-employees
Notice arises from Revel shifting business model from employing drivers (W2) to engaging with them as 1099 independent contractors (industry standard)
Just 5 months ago, in January 2024, Revel stated it had ~1,500 employee-drivers
Pivot to independent contractor model was driven by driver recruitment issues and, we believe, fundraising considerations
The New York State Worker Adjustment and Retraining Notification (WARN) Act requires “covered businesses to provide early warnings of closures and layoffs to all affected employees, employee representatives, the Department of Labor, and Local Workforce Development Boards”.
Since Revel’s, soon to be abandoned, rideshare business model classified all its drivers as W2 employees (vs. 1099 independent contractors), an official WARN notice was expected. On June 6th, Electric Peppers LLC (the corporate name Revel’s rideshare business uses) filed its WARN notice, listing 791 workers (out of 791 total employees) as being impacted by layoffs with a start and end date of September 12, 2024. This date is exactly in line with Revel’s recent announcement regarding shifting its business model away from employing drivers to the industry standard 1099 model.
791?
In July 2023, Revel announced its 1,000th W2 employee-driver hire, which was then followed by a company update in January 2024, five months ago, that it employed ~1,500 employee-drivers. In our initial article on Revel’s business model shift this is where we got the ~1,500 NYC TLC driver figure from. Obviously, the WARN notice lists almost half this number. What happened?
“Revel operates a fleet of over 500 electric vehicles (EVs) — including Tesla Model Ys and Model 3s and Kia Niro EVs — delivering rides in all five boroughs, parts of northern New Jersey, and to-and-from the three major airports. Revel employs about 1,500 drivers as W2 employees who have guaranteed hourly wages and access to benefits like healthcare, paid time off and 401(k) retirement planning. Revel also covers all vehicle costs like leasing, maintenance and charging.”
- Revel press distribution (January 17, 2024)
We’ve recently gathered information from several primary sources, including Revel itself and Revel drivers. It appears Revel had a hard time retaining drivers (and recruiting new ones) shortly after hitting ~1,500 W2 drivers in January. Again, this is only five months ago.
According to a Revel representative, its driver base decreased closer to 1,000 (👀) shortly after the January announcement and this is when the company took the decision to launch a “pilot” to see if drivers would prefer leasing company EVs and becoming 1099 independent contractors (“fare-based earning program pilot”).
The pilot went well and Revel shared the following high level survey data with us from ~100 drivers who participated in the W2 to 1099 pilot:
Average Satisfaction = 4/5
Four in five said they would recommend the program to another driver (79%)
Of drivers who have driven on another platform:
A majority said it was better (55%)
Three quarters said it was the same or better (74%)
The above timeline is how to roughly bridge from the ~1,500 Revel employee-driver figure on January 17th to the 791 listed in the WARN notice on June 6th.
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Lessons To Remember? Too Late?
Since Revel launched its rideshare business in NYC, this publication has had several off the record conversations with Revel executives, company representatives and companies that have or had partnered with Revel. This has occurred over the last two to three years. We take the privacy and confidentially of those who reach out to us seriously and this is why many industry participants trust us with information.
Despite are often critical or constructive (we’ve tried to be fair) coverage, Revel has communicated with us respectfully and has kept an open communication line. We appreciate this and we wanted to publicly note it. We’ve also invited Revel representatives, several times, to leverage AutoMarketplace’s distribution platform to share their side of the story and their pitch or vision of how NYC rideshare should look. Hopefully, we can bring this to our audience soon (not confirmed though).
AutoMarketplace, as our readers will know, has long predicted Revel’s W2 employee-driver model would simply not work in NYC. We know our local market. We operate in this market. We know the taxi and “rideshare” business model(s). We know financial, business and insurance math.
After 3+ years of burning through investor cash, usefully building out much needed City EV charging infrastructure but also promoting an essentially false narrative that a majority of NYC TLC drivers prefer to be W2 employees, Revel likely both ran out of investor patience and came to the same realization we, and others in the industry always knew, drivers prefer to be 1099 independent contractors. In addition, making a W2 driver model work and owning your own fleet of vehicles, is an immensely difficult business to scale and/or make profitable.
“Based on [our] interactions with hundreds (if not thousands) of NYC TLC drivers over the years, [we] do not think a W2 employee model will work with most TLC drivers. Contrary to perhaps some out-of-touch media narratives, most NYC TLC drivers prefer the independent contractor model. What many drivers want though are increased protections (i.e., minimum pay laws, ability to appeal App decisions, clarity on payment breakdowns) and access to benefits (i.e., healthcare). For example, Uber and Lyft’s duopolistic NYC market shares (i.e., an Uber and Lyft deactivation will essentially kick someone out of the TLC industry) is more concerning to drivers than being classified as independent contractors. While [we] wish Revel well and think their entry is a net positive for the industry, [we] don’t see a W2 model working with the vast majority of drivers. Separately, [we] think it will be very hard to take away share from Uber and Lyft’s customer and driver base. Happy to be proven wrong though.”
- AutoMarketplace (July 26, 2021)
We are saying all of this because we find it interesting that when huge proclamations are made by companies and their leaders, which are ultimately dead 😵 wrong, it’s important to note and reflect. It is no secret that this publication, and many others, believe (Note: believe = hearsay ultimately) Revel was a major reason why ~10,000 (March + October) new EV restricted FHV Licenses (TLC Plates) were allowed to be released during 2023 alone!
We also believe (Note: believe = hearsay) Revel’s significant lobbying efforts helped them gain favor with the Adams administration and with David Do’s Taxi & Limousine Commission (TLC). Observing the public relationship between Revel and the TLC has always been interesting (unethical, not necessarily illegal, aspects to the relationship that we’ve highlighted over several articles).
We really have no interest in getting political or picking a fight with the regulator we want to see succeed or a company we actually hope can become another option for NYC TLC drivers (i.e., we aren’t gaining anything financially if the TLC or Revel fails).
That being said, if we do not cover these news items or highlight these regulatory and business mistakes, who will? Otherwise another company is bound to repeat the same mistakes as Revel. Otherwise another TLC Chair will repeat the same mistakes as David Do (or Chair Do will continue to make the same mistakes 🤔). After all, this publication is, in many ways, a business trade newsletter. To the extent politics and policy impacts business, we will cover that.
We occasionally make predictions to inform our readers, many who are business executives (even investors) in different parts of the automotive-mobility market, both in and outside of NYC. Equally important, many of our readers are also drivers. The 791 figure in the WARN notice might just seem like a number, but those are real people with real families, that put their trust in Revel’s vision.
Finally, we’ve independently spoken to several current Revel W2 drivers who have shared they are not planning to make the switch to 1099 independent contractors and plan to claim unemployment benefits (as they have every right to). We stand by our long-running prediction that Revel will shutter its NYC rideshare business to focus on EV infrastructure.
In fact, if we were Revel investors, we would demand they shut down their NYC rideshare business (for now), sell off a rapidly depreciating (taxi) EV fleet and focus on EV infrastructure. In addition, we would tell Revel’s management team to focus on offering EV vehicle financing solutions and maintenance services to NYC TLC drivers who own (or want to purchase) their own electric vehicles (less risky, but leverages Revel’s unique NYC EV expertise).
We hope Revel sticks around, but we continue to warn NYC TLC drivers, don’t bet on it. Make backup plans if your income is reliant on Revel’s rideshare business.
