Did Amazon classify you as an independent contractor when it should have been treating you as an employee?

Were you underpaid or denied employment rights or benefits as a result?

If so, here are some things you may want to know.

What’s the difference between an employee and a contractor?

 Workers can be either employees or independent contractors.

The US Department of Labor  explains the difference.

 Employees

• Work for someone else’s business
• Are paid a salary, or hourly, or by piece rate
• Use the employer’s materials, tools, and equipment
• Typically work for one employer
• Have a continuing relationship with the employer

Also, the employer assigns the work and decides when and how it will be performed.

Independent Contractors

• Run their own business
• Are usually paid upon completion of a project
• Provide their own materials, tools, and equipment
• Typically work for multiple clients
• Have a temporary relationship with the client until the project is completed
• Decide when and how they will perform the work
• Decide what work they will do

 Many states have their own tests to distinguish between workers who should be treated as employees and those who are really independent contractors. For example, California applies the “ABC test”:

Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:

• The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
• The worker performs work that is outside the usual course of the hiring entity’s business; and
• The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

For example, a plumber who comes to a business to fix a leak is clearly an independent contractor. However, a plumber who works for a plumbing company and services the company’s client should probably be classified as an employee.

Misclassifying Employees as Contractors

Many “gig economy” companies have been challenged for using (supposedly) independent contractors rather than employees.

As the Harvard Business Review (HBR) describes,

Uber has been dogged by its decision to classify its vast network of drivers as independent contractors. Almost 400,000 Uber drivers in California and Massachusetts reached a $100 million settlement with the company in 2016 (a settlement that was later thrown out by a federal court as insufficient in the compensation it provided the claimants). Late in 2016, two drivers in New York were provided unemployment benefits when regulators in that state ruled them to be employees, not independent contractors.

According to Statista, there are about 57.3 freelancers working in the US,

According to the HBR, many of these so-called independent contractors are misclassified:

According to a 2009 report issued by the United States Government Accountability Office, a significant portion of independent contracting doesn’t pass the smell test and in fact represents misclassification of workers. For example, about one-third of construction workers in the U.S. South, an industry where the problem has been long entrenched, were estimated to be misclassified. This number isn’t exceptional, as state-level data shows that anywhere from 10% to 20% of employers misclassify at least one employee.

Why do employers misclassify employees as contractors?

Why do employers misclassify employees as contractors? Mostly, to save money.

As the Loyola Law Review explains,

Employment status confers many benefits to a worker. Most importantly, … employment determines a worker’s right to minimum wage and overtime protections. It also entitles a worker to Social Security benefits, unemployment, worker’s compensation, and the federal rights to collective bargaining and freedom from discrimination. These benefits, though, create substantial costs for employers. According to the U.S. Bureau of Labor Statistics, employment benefits represent nearly 30 percent of an employee’s total compensation costs, with standard wages representing the remaining 70 percent.

Are Amazon’s drivers really independent?

 Treating workers as independent contractors rather than employees can lead to charges of underpayment and wage theft.

 As Vice reported,

Though Amazon’s delivery drivers operate Amazon-emblazoned vans, wear Amazon uniforms, and are trained by Amazon employees, they are technically not employed directly by Amazon but by small contractors, known as “delivery service partners,” that operate out of Amazon warehouses around the country. 

Amazon closely supervises how these “independent” drivers do their jobs. As The Detroit News reports,

“Personal grooming must be maintained at an acceptable level, including but not limited to prevention of unpleasant breath or body odor, modest perfume/cologne, and clean teeth, face/ears, fingernails and hair,” Amazon.com Inc. says in a recent version of its policies governing these small delivery companies, or what the company calls Delivery Service Partners.

The document, reviewed by Bloomberg, also requires that drivers refrain from “obscene” social-media posts, undergo training programs approved by Amazon, follow instructions from Amazon’s delivery app and be drug tested whenever Amazon representatives ask.

Drivers are often paid day rates, such as $135 per day, to deliver packages for 10 hours. However, drivers who work longer may not get paid more.

As Vice notes,

Under the Federal Labor Standards Act of 1938, companies must guarantee their employees overtime pay if they work more than 40 hours a week, even when workers are paid daily rates. In many states, workers also must receive unpaid meal breaks and paid rest breaks on their shifts, and must be paid at least the minimum hourly wage, including if it falls below the day rate. 

Business Insider reported that Amazon agreed to pay contract delivery drivers $8.2 million to settle a wage-theft lawsuit:

The lawsuit, originally filed by two Amazon delivery drivers in 2017, had alleged Amazon was partly to blame for illegally failing to pay drivers the minimum wage and denying them compensation for overtime and rest breaks.

Another Business Insider article noted that

California’s labor commissioner fined Amazon and Green Messengers, a contractor used by Amazon to deliver packages, $6.4 million for stealing wages from 718 delivery drivers, the regulator announced in a press release Monday.

Its investigation found that the drivers, who were employed by Green Messengers to work 10-hour shifts, often had to work more than 11 hours and skip their meal and rest breaks in order to complete their Amazon delivery routes due to the high volume of packages.

The Verge reported that

Amazon will pay $61.7 million to Flex drivers to settle allegations of stolen tips, after an extensive investigation by the US Federal Trade Commission. The figure represents the total amount of allegedly withheld tips over the two and a half years that Amazon Flex’s controversial base pay system was in place.

What can you do if Amazon mis-classified you as a contractor?

If you were mis-classified as an independent contractor by Amazon, call attorney CJ Rosenbaum at 212-256-1109, text 212-256-8492, or email CJ@AmazonSellersLawyer.com. You might want a dedicated email for this.l You can also submit a summary of your situation online.