Chegg Layoffs 22% of Workforce
Why Is the Reason For Chegg Layoffs?
Chegg layoffs approximately 22% of its global workforce, affecting 248 employees. The online education company says the move is aimed at cutting costs and restructuring operations in response to the rising popularity of AI-powered tools like ChatGPT, which are reshaping how students seek academic support.
What’s Behind Chegg’s Decline?
For months, Chegg has been struggling with decreasing web traffic. The company admits that this downward trend is likely to continue before it gets better. One key reason? Students are increasingly turning to artificial intelligence platforms that offer fast, free, and often more comprehensive academic assistance.
Chegg also pointed to Google’s expanded AI Overviews, which keep users within Google’s ecosystem, reducing the need for external platforms. On top of that, AI companies like OpenAI and Anthropic are giving away free subscriptions to educators and students-pulling more users away from Chegg’s paid services.
What Will Change at Chegg?
As part of this restructuring, Chegg will close its offices in both the U.S. and Canada by the end of 2025. The company will also scale back on marketing, product development, and general administrative spending.
Chegg expects to take on $34 million to $38 million in restructuring costs, mostly in the second and third quarters of this year. But the company anticipates significant long-term savings: between $45 million to $55 million in 2025, and up to $110 million by 2026.
How Is Chegg Performing Financially?
Chegg’s first-quarter numbers paint a challenging picture. The platform saw a 31% drop in subscribers, down to 3.2 million users. Revenue also took a major hit, falling 30% year-over-year to $121 million. The majority of that decline came from its subscription services, which fell nearly a third to $108 million.
Is Chegg Taking Legal Action?
Earlier this year, Chegg filed a lawsuit against Google, accusing the tech giant of harming content creators by promoting its own AI-generated overviews. Chegg claims this shift is reducing demand for original content and making it harder for educational platforms to compete-ultimately leading to fewer site visits and paying customers.
How Big Is Chegg’s Workforce?
Before the announced layoffs, Chegg had 1,271 employees as of December 31. With the reduction in staff and office closures, the company is making a bold and risky bet on its future in an increasingly AI-dominated education landscape.
Have You Been Affected by Chegg’s Layoffs?
If you’re one of the employees affected by Chegg’s layoffs, it’s important to understand your rights, especially when it comes to severance pay.
In Ontario, non-unionized employees are often entitled to much more compensation than what an employer initially offers. Your severance entitlement can depend on factors such as your role, salary, length of service, and age. In some cases, you could be owed up to 24 months’ pay.
At Whitten & Lublin, our employment lawyers have extensive experience advising clients on their employment rights. If you’ve been affected by Chegg’s layoffs, contact us online or call 416-640-2667 to find out if you’re getting the compensation you rightfully deserve.