The CEO of Waitr Holdings brushed off the threat of lawsuits from the company's driver network, the like of which have dogged Uber and other companies in recent years in the "gig economy," where people typically operate under short-term contracts or on freelance work as opposed to permanent jobs.
Waitr, a fast-growing Lake Charles-based food delivery app company that went public in November with a listing on Nasdaq, was hit last month with its own lawsuits filed by some current and former Louisiana drivers who allege they weren't compensated adequately under the Fair Labor Standards Act.
The dozens of labor act lawsuits filed against Uber, as well as GrubHub and others, in recent years was a deciding factor for Chris Meaux, Waitr's CEO, in making almost all of the company's drivers employees rather than independent contractors when he founded the company six years ago.
"It was on my mind when we started the company, so it was a very conscious decision on our part," Meaux said on the sidelines of a New Orleans Entrepreneur Week event. "Our model is different than most other companies in our space in that we elected to employ the drivers."
Still, while that largely avoids the central issue in the Uber cases, where the argument has been that drivers were underpaid because they were "misclassified" as independent contractors, the lawsuits filed in the Eastern District of Louisiana court against Waitr in February claim that even directly employed drivers were underpaid because their net compensation fell below the mandated minimum wage.
That makes the lawsuits more akin to those brought by drivers in several states against Papa John's, Domino's and Pizza Hut franchisees, which resulted in multimillion-dollar settlements, according to Bohrer Brady lawyers, which are representing the plaintiffs in the first case filed.
Waitr, like many companies with a gig economy business model, has had to tread a fine line between pushing down costs for the restaurants in its network while also compensating the drivers adequately enough to retain them.
"The number one problem that companies in our space have is driver turnover," Meaux said, noting that more than 90% of Waitr's 18,000 employees are drivers. "If maybe a few drivers don’t understand exactly how they got paid, we can’t control that except maybe communicate better with those folks."
He said Waitr has introduced a monthly drivers newsletter and made other efforts to deal with driver grumbles.
"Some drivers didn’t understand how they were paid so we tried to clarify that in info about how they're paid," he said. "Some drivers are saying that tips are too low in some markets and so we’ve looked at how we address gratuities in the app and incentivize consumers to give more gratuities. In some markets, we’ve had to increase the minimum that we pay drivers just to attract the right kind of drivers. Were constantly listening to our team to get better."
He said the lawsuits will not be a distraction for management as the company continues to grow rapidly.
Founded in 2013 by Meaux and initially funded by local investors in Lake Charles, Texas billionaire restaurateur Tilman Fertitta last year acquired it with a view to a public listing. Waitr has a current market value on Nasdaq of more than $800 million.
"It’s not a major distraction for us," Meaux said of the lawsuits. "The legal community is what it is. It’s just a fact of doing business. That's why we hire lawyers too."
Waitr has targeted small and medium-sized markets, expanding from its Gulf Coast base to 33 states, most recently Indiana, Kentucky and Minnesota, the latter through acquisition of Bite Squad, which doubled the size of the company in January and gave it a "playbook" for future acquisitions, Meaux said.
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