Food delivery service Waitr said this week it is shifting its model so that drivers are classified as contract workers rather than hourly ones, according to KATC.
Under the new policy, Waitr drivers will get paid per delivery rather than by the hour. Companies paying contract workers aren’t legally required to offer benefits or withhold taxes, something Waitr must do under its current employee model.
For a long time, the service stood by its policy of paying drivers hourly and categorizing them as W-2 employees. Waitr founder and former CEO Chris Meaux was positive about the model when he spoke to The Spoon last year: “Efficient employees are much less expensive,” he said, adding that, “If you manage the driver flee right and you schedule the drivers when you need them, [you] can do it with a fraction of the drivers that [competitors] require.”
That tactic doesn’t appear to be paying off, however. KATC obtained an email Waitr sent to drivers that frames the change, which will take place in April, as a positive one, though it’s hard to buy that pitch looking back through Waitr’s activity over the last several months.
The service, which went public in 2018, outraged customers and restaurant partners alike last year when it introduced a new “performance-based” fee structure for restaurants. Protests ensued.
The company has also done three rounds of layoffs since June 2019, with the most recent one being last week. The company was for a time in danger of being delisted from the Nasdaq, and one report from October stated the company only has enough cash to run through March of 2020.
Waitr has seen its fair share of role changes, too. Meaux stepped down as CEO in August of 2019. He was replaced by Adam Price, who resigned at the end of December and was replaced by Carl Grimstad. Waitr’s CFO, Jeff Yurecko, also resigned, as have two board members.
Considering that glut of bad news, reclassifying its workers as contract rather than hourly seems less the positive change Waitr is trying to spin and more a desperate scramble to cut costs and try to save the struggling company. It’s doubtful that will be enough to save the company.
The switch also comes at a time when talk of how gig economy workers get classified is loud. California’s Assembly Bill 5, which reclassifies gig workers as employees rather than contract workers, was signed into law last year, though it’s getting significantly pushback from delivery companies.