Fintech/credit: Montri Nipitvittaya/Shutterstock.comFintech Startup PayActiv Hires Ex-McGuireWoods Partner as Chief Legal Officer
David Reidy joins the Silicon Valley startup, which offers payday advances, as the company eyes global expansion and faces a racial discrimination lawsuit.
January 09, 2020 at 04:45 PM
3 minute read
The original version of this story was published on Corporate Counsel
The chairman of McGuireWoods' fintech practice in San Francisco has left the firm to take the reins of the legal department at PayActiv Inc. as the fintech company's first top lawyer.
The Silicon Valley-based startup announced David Reidy's hiring as chief legal officer on Wednesday. He now oversees all legal, compliance and legislative issues for the company, which has plans for international expansion and is facing a racial discrimination lawsuit from one of its former managers.
PayActiv offers payday advances to workers in exchange for a $5 membership fee that users pay during the periods that they use the company's services for early access to earned wages. The firm expanded nationwide in 2018 and has raised $17.2 million in funding, according to its website. The company has partnerships with ADP, Uber Technologies Inc., Visa Inc. and Walmart Inc.
"Two-thirds of America's hourly workforce, translating to more than 90 million hardworking people, are in need of financial relief between paychecks," Reidy stated in a news release.
He wrote in an email Thursday that PayActiv "will be closely following the progress of California Senate Bill 472, which would create specific licensing for earned wage access providers in California."
Reidy also noted that California is expected to revamp its Department of Financial Protection and Innovation. He said the state "can be a leader and provide a template for other states, and based on the governor's stated commitment to innovation we will be looking to the new DFPI to promote consumer friendly products such as earned wage access."
Reidy joined McGuireWoods in 2016 after more than a decade at Reed Smith. During his time at the former firm, he "was already active in managing legal issues" for PayActiv, the company stated in a news release.
David Reidy, chief legal officer of fintech firm PayActiv Inc./courtesy photo
"David brings incredible experience that will benefit our company and our clients," said PayActiv CEO and founder Safwan Shah. "PayActiv distinguishes itself through its innovation and purpose-driven value system, and David embraces this and is an industry trailblazer who will help us achieve our goals."
In July 2019, Pedro Ibarra, a former manager at PayActiv, filed a whistleblower suit in California state court alleging that the company and its founders fired him after he complained about racial discrimination.
The suit also raises questions about "whether the company is acting like a regular payday lender and therefore should be classified as a creditor," according to a report from The San Jose Mercury News.
PayActiv declined to comment on the allegations.
The plaintiff's attorney, Shawn Tillis of Winer, McKenna, Burritt & Tillis in Oakland, California, said in an interview Thursday that PayActiv had filed a motion to compel arbitration and has yet to answer the complaint.
"My client does not want it in arbitration. He wants it out in the open in the full light of day," Tillis added.
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