Listen to this articleThe basics:
- NJ alleges Amazon illegally classified Flex drivers as contractors
- State says misclassification denied drivers wages, benefits
- Lawsuit seeks back pay, penalties & fund contributions
- Amazon defends Flex program, calling lawsuit “wrong on the facts”
New Jersey officials filed suit against Amazon. The state accuses the e-commerce giant and its Amazon Logistics delivery network of illegally classifying Flex delivery drivers as independent contractors and denying them the wages, benefits and legal protections owed to employees.
Attorney General Matthew Platkin and state Labor Commissioner Robert Asaro-Angelo announced the lawsuit Oct. 20. It alleges that Amazon’s Flex program violates state labor laws and has cost workers as well as state trust funds (unemployment, disability and workforce development) millions of dollars each year. Through Flex, drivers use their own vehicles to deliver packages.
Platkin says other New Jersey employers had to make up shortfalls to these trust funds.
“Let’s not make any mistake about this: when a trillion-dollar company says it is providing you with ‘a flexible way of earning extra money on your own schedule,’ it is not offering this opportunity for your benefit,” said Platkin. “Amazon is looking out for itself. Amazon is taking advantage of Flex drivers and enriching its bottom line by failing to obey our labor laws and offloading its business expenses for the benefit of shareholders.”
[W]hen a trillion-dollar company says it is providing you with ‘a flexible way of earning extra money on your own schedule,’ it is not offering this opportunity for your benefit.
– Attorney General Matthew Platkin
‘Illegal – plain and simple.’
The eight-count complaint, available here, contends that Amazon shifts the costs of doing business — such as gas, insurance, maintenance and tolls — to Flex drivers while exercising significant control over when and how they work. Despite their label as contractors, the state alleges Amazon’s app directs these drivers; assigns specific routes; and monitors for speed, delivery order and efficiency.
According to the lawsuit, the misclassification deprives drivers of state-mandated minimum wage, overtime, sick leave and unemployment benefits. Investigators also allege Amazon failed to make required contributions to the New Jersey Unemployment Compensation Fund, Disability Benefits Fund, and Workforce Development Fund.
Since at least 2017, thousands of Flex drivers have been at work in New Jersey.
Asaro-Angelo described Amazon’s “misclassification” of these Flex drivers as “illegal – plain and simple.”
“We will not allow Amazon to expand its empire by exploiting New Jersey workers and our state’s unemployment trust funds,” said Asaro-Angelo. “Flex drivers deserve the dignity and respect of proper classification, ensuring they receive the benefits and rights they are entitled to. Classifying workers correctly is New Jersey law, there are no exceptions, regardless of the company size.
“We are bringing this action to protect New Jersey’s Flex drivers and our entire state.”
Hot topic
This lawsuit ties into the broader, hot-button issue under debate around the state about independent contractor status.
This spring, the labor department released a proposed rule that would re-interpret the ABC Test — used to determine whether a worker is an independent contractor or gig worker versus an employee. The topic has drawn fierce debate, particularly from several different segments of independent contractors who argue that the policy would take away their flexibility and independence. Business leaders and groups also say it would upend a number of sectors.
In their own words
NJBIZ readers share their arguments against the proposed rule change:
The state has maintained that the proposed rule change aims to protect workers, such as with this Amazon case.
Following a public comment period, NJDOL has still not made a determination about moving forward with that rule change. Meanwhile, the spirited debate continues on both sides of the issue while awaiting a decision from the Murphy administration.
Officials argue that in this case, Amazon would not be able to satisfy the ABC Test. Under New Jersey law, most workers are presumed to be employees unless an employer can meet all three parts of the test:
- Affirming that the individual is free from control or direction;
- The work is outside the company’s normal business; and
- The worker operates an independently established trade or business.
The state argues that Amazon’s system clearly fails this test.
‘Wrong on the facts and the law’
The complaint seeks to recover unpaid wages and benefits, penalties and back contributions to state funds, and asks for a jury trial.
Amazon is pushing back – stressing that its Flex delivery partners can take breaks and run errands anytime they want; that these individuals always earn at least the dollar amount shown in the offer when they accept a delivery block; that there are no minimum amount of deliveries required to remain active; and that the majority of Flex delivery partners finish their delivery blocks on or ahead of schedule.
For nearly a decade, Amazon Flex has empowered independent delivery partners to choose delivery blocks that fit their schedules, giving them the freedom to decide when and where they work.
– Mary Kate Paradis, Amazon spokesperson
In a statement to NJBIZ, Amazon spokesperson Mary Kate Paradis said the company is still reviewing the lawsuit.
“But one thing is already clear: it’s wrong on the facts and the law, and misrepresents what Amazon Flex is and how it works,” Paradis told NJBIZ. “For nearly a decade, Amazon Flex has empowered independent delivery partners to choose delivery blocks that fit their schedules, giving them the freedom to decide when and where they work.
“This flexibility is one of the main reasons many drivers say they enjoy the program.”
