The end for EatStreet?

In a federal court filing last Friday, Madison-based food delivery company EatStreet said it can no longer pay $1.2 million to settle a lawsuit brought by workers, and is likely headed for insolvency and foreclosure, according to a report from The Capital Times. However, attorneys for the workers who filed the lawsuit dispute those claims.

The court filing marks one of the latest developments in a years-long legal battle between EatStreet drivers and the company. The suit alleges that EatStreet violated the federal Fair Labor Standard Act and Wisconsin state wage law by using tips to offset wages owed to employees, and by failing to compensate them for vehicle and mileage expenses.

In December 2021, EatStreet agreed to settle the case, paying out $1.24 million to resolve the allegations. That amount, just a fraction of the $4.54 million the workers’ attorneys estimated to be their “maximum potential recovery,” was chosen in part because EatStreet offered financial documents showing it could not afford to pay a larger settlement.

But then earlier this month, EatStreet told the court that it had lost its primary source of funding, and that it would no longer honor the terms of the settlement. Additionally, EatStreet says it has been unable to find a buyer or investor willing to take ownership of the business.

Meanwhile, the plaintiffs’ attorneys say EatStreet has failed to provide any evidence to support its claim that it can’t meet the terms of the settlement agreement. They argue that EatStreet should be forced to comply with the original order requiring it to notify workers immediately.