After 18 months in the legal system, Waitr Holdings Inc. is in the final stages of settling a class action lawsuit brought against the company by delivery drivers who claimed they were not paid at least minimum wage in violation of federal law.
The value of the settlement could be roughly $7.4 million and the plan is to divvy a maximum of 1.5 million shares of the company’s stock among tens of thousands of drivers after attorneys fees and the lead drivers are compensated.
Waitr’s stock closed at $4.61 per share as Monday, down from $5.59 in early August. It’s a significant improvement from when the stock was trading below $1 for several months in 2019 and faced being delisted from the stock exchange.Advertisementabout:blank
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The Louisiana technology company had its first profitable quarter – about $10 million in net income – of its publicly traded history this year. It has $87 million in cash on hand, records show.
Waitr did not respond to repeated interview requests for this story.
Two Waitr drivers filed a federal lawsuit which claimed the app-based food delivery service violated labor laws by not paying minimum wage and overtime.
Jualeia Halley and Heather Gongaware filed the collective action suit in the Eastern District of Louisiana in February 2019. A second lawsuit by other drivers was filed soon thereafter.
Gongaware was an independent contractor at Waitr in Baton Rouge who began working with the company in September 2016. Gongaware claimed she was misclassified as an independent contractor and was underpaid by Waitr by $275 each week, according to the initial lawsuit. Meanwhile, Halley a former driver, claimed she was underpaid by $258 each week.
Halley and Gongaware alongside drivers Autumn Montgomery and Nateshus Jackson stand to split potentially 3,891 Waitr stock shares.
The lawsuit claimed that Waitr misclassified some drivers as independent contractors and didn’t pay them minimum wage for all the hours they worked or overtime when they worked more than 40 hours a week. Rather, the company erroneously classified some employee drivers as independent contractors and paid only a delivery fee in addition to tips from customers, according to the lawsuit.
Also, by not reimbursing drivers for mileage and other expenses for using their personal vehicles, their pay fell below minimum wage, according to the lawsuit.https://a494f8ae2443bf1d41d9d398e78fbafa.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html
Since then, the case has slogged through the court system until a proposed settlement was sent to a judge in early summer.
A.B. Data, a Milwaukee, Wisconsin-based company was hired for $100,000 by Waitr to connect with former drivers has processed more than 9,300 claims over the summer.
The drivers are represented by Anderson Alexander PLLC, Bohrer Brady LLC and Briney Foret Corry LLP for the settlement.
Attorneys on behalf of the drivers are seeking 518,806 shares of Waitr stock, which could be roughly $2.4 million split among them.
The attorneys are pushing for a settlement to happen soon for fear the company might not have the cash in the future, especially if the employees or contractors are forced into a method of dispute known as legally binding arbitration which takes it out of the court system.
“Waitr has consistently disputed that all of the individuals included within the scope of the settlement agreement are able to proceed in this forum at all and sought to compel arbitration,” said Austin W. Anderson, an attorney at Corpus Christi, Texas-based Anderson Alexander. “It is not clear whether Waitr will have the ability to pay a judgment or settlement of significant magnitude in two or three years from now when the litigation is likely to approach a consideration of the merits of plaintiffs’ claims.”
Likewise, the drivers’ attorneys suggest that Waitr disputes how much drivers could be eligible to receive.
“It is Waitr’s position that the potential recovery available to a large number of the settlement class members—if they were to overcome the numerous procedural obstacles and succeed on the merits—is nominal, and for all Plaintiffs is relatively small (i.e., typically no more than a few hundred dollars),” Anderson said. “Plaintiffs disagree with Waitr’s valuation, and instead contend that, depending on the amount of time worked within the relevant time period, the individual delivery driver’s claims could reach into the thousands of dollars, liquidated.”
Attorneys representing the delivery drivers and legal representation from Waitr have been working on a settlement agreement since April when a judge approved some preliminary decisions, court records show.
In September 2019, Waitr and the class action attorneys attended a mediation session in New Orleans and sought to ‘settle in principle’ the lawsuit, records show. https://a494f8ae2443bf1d41d9d398e78fbafa.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html
The class action lawsuit is for Waitr delivery drivers who have worked for the company or previously worked for the business beginning in February 2017. Payment in Waitr stock depends on how many weeks the driver has worked at the company and it is subject to taxes by both Waitr and the employees.
There are an estimated 33,313 individuals eligible as part of the class action which is a mix of independent contractors and former employee drivers. Several hundred drivers have opted out of the class action so far, records show.
The largest pay-out in claims so far was 169 shares of Waitr’s stock and the average award was 26 shares of Waitr stock which equates to roughly $779 and $120 respectively.
Waitr was founded in Lake Charles in 2013 and has significant corporate operations in Lafayette. It went public in November 2018. The company laid off thousands of employee drivers in April – including 2,300 in Louisiana – and has sought to hire contractor drivers to deliver food to customers from restaurants instead. Contract drivers are paid by the delivery and collect tips, while employee drivers are paid by the hour and collect tips.
A final approval hearing is scheduled on Wednesday for the settlement.