CEO fails to pay employees, carriers after Elite Transit collapse
Article has been updated to include comments from Kushal Dave, Elite Transit’s general counsel.
In retrospect, the signs were there that Elite Transit Solutions was in dire financial trouble. However, former employees say that when they raised concerns to CEO Michael D. Johnson about carriers not being paid or suddenly being blocked from posting freight on one of the country’s largest load boards, the entrepreneur “always had an answer for everything.”
While Elite Transit Solutions, headquartered in Pittsburgh, hasn’t officially ceased operations, it appears Johnson is one of a few employees remaining at the freight brokerage. Elite Transit’s general counsel Kushal Dave stated in an email to FreightWaves that “there are still employees” working at the freight brokerage. After initially keeping on a skeleton crew of about 10-12 employees after firing around 65 employees via Microsoft Teams on Nov. 3, he has since laid off the majority of those employees as well. Dave disputes the number of employees who were fired via Teams but failed to provide a different number.
As of publication Friday, Johnson sent out an email to former employees who haven’t received their final paychecks for two weeks’ work and accrued time off, which were due Nov. 10. Johnson’s email, obtained by FreightWaves, said, “At this moment, it is looking like we can get the payroll released in the next couple of weeks. The main variable upcoming is Thanksgiving and Black Friday.”
While Johnson, who founded the logistics company in 2013, initially agreed to speak with FreightWaves about the ongoing financial situation at Elite Transit Solutions, he later declined multiple requests for comment about the company’s operating status.
Those who stayed on an extra week to help Johnson, as they were reportedly told there was a promising deal in the works but that he couldn’t disclose more details because he was waiting for the papers to be signed, are owed three weeks’ pay after the deal apparently fell through. Dave disputes ex-employees’ statements that a potential deal fell through but declined to provide additional details about Elite Transit’s next steps.
“We knew things were bad but he strung us all along with the belief that he was signing these contracts, that he was selling a portion of the company to a private-equity firm, which we were told was going to inject the funds into the business so everybody’s jobs will be saved,” said one ex-employee, who spoke to FreightWaves on the condition of anonymity for fear of retaliation.
One source familiar with the situation alleges Johnson couldn’t come up with the nearly $200,000 needed to make the final payroll and is now dodging ex-employees’ questions about when or if they will be paid. Dave disputes the amount of payroll owed to ex-employees but declined to provide a different amount.
FreightWaves obtained a copy of the Microsoft Teams video call on Nov. 3 in which Johnson fired an unspecified number of staff members but didn’t allow them to submit questions using the chat function and muted their microphones so they weren’t able to ask questions.
After stating that employees who worked in Elite Transit Solutions’ satellite offices in Charlotte, North Carolina, Chicago and Phoenix needed to return their company-owned equipment by Nov. 8, he offered his support and volunteered to reach out to his “rather large network” for ex-employees needing jobs.
“It’s a very tough situation, a very tough time in the industry and in the economy as well,” Johnson said on the video call. “If you need a letter of recommendation or support in obtaining new employment, I want to be personally here to help you. Please feel free to reach out to me directly. If you don’t have my cellphone number, please feel free to message me on LinkedIn.”
Source: freightwaves.com
