Payroll and HR services provider Gusto let go of 126 of its employees Wednesday, about 5% of its staff, the latest in a string of layoffs in the tech sector this year.
Gusto CEO Josh Reeves explained the rationale behind the layoffs and the support and severance pay offered to the affected employees in a company-wide email that was posted on its website.
“The reality is the macroeconomic situation has changed significantly over the past several months and affected all businesses as a result,” he wrote. “Adapting is important, so we can ensure the work we do ultimately drives the impact we seek — especially in this volatile economic climate. I own and acknowledge that we didn’t always get this right. And one of the impacts of that is saying goodbye to a number of Gusties today.”
He apologized to the outgoing employees of the San Francisco-based company. “To the Gusties impacted by this decision, I am sorry,” Reeves said. “I know it upends your lives and livelihoods, and that it’s particularly painful given our product is the People Platform, and our mission is to create a world where work empowers a better life. I am grateful for the care and dedication you put into your work on behalf of the employers and employees we serve. You will be missed. And we are committed to helping you find what’s next, whether that’s a new role elsewhere or starting a business of your own. We’ve set up and will share an opt-in alumni talent directory to help make introductions between you and companies in need of great talent.”
The company is offering the laid off employees severance pay of 12 to 16 weeks of base salary, based on their tenure. They are also receiving COBRA health insurance coverage of three to four months, depending on tenure, and a cash stipend for Modern health use through the end of the year. The company is also providing accelerated vesting of stock-based compensation, removing the one-year cliff on vesting for employees who have been with the company for less than a year, and pro-rated vesting of their restricted stock units.
Gusto’s policy, according to a spokesperson, is that when employees leave the company after three years, their three-month post-termination exercise window disappears and they have the full 10 years from grant date to exercise their stock options. Gusto will allow now any laid off employees who have stock options and have not yet reached their three-year anniversary the full 10 years to exercise those options.
On the professional network site Blind, some anonymous Gusto employees wondered about how the stock vesting would be affected by the company’s plans to eventually go public.
Gusto is also offering a laptop stipend and outgoing career and immigration support to outgoing employees. They will be able to keep their other equipment, including monitors and keyboards, to support them in their future job search. Those who are on a work visa will have the opportunity to book sessions with Gusto’s immigration counsel for additional support. They can also opt into an alumni career directory and share a farewell note and personal contact information with their colleagues.