The Hill: New Jersey’s Worker Classification Crackdown Could Have Broad Impact

At a time when the largest corporations in the U.S. are working to outmaneuver every kind of labor regulation, New Jersey has drawn a line in the sand.

Attorney General Matthew J. Platkin and Labor Commissioner Robert Asaro-Angelo have sued Amazon for misclassifying drivers on its Uber-like Flex delivery app as independent contractors, and for related wage-theft, withholding of paid sick leave and failure to pay into state social insurance funds. Other states must follow New Jersey’s lead.

Other states have successfully sued companies that operate smaller app-based delivery platforms like Gopuff for independent contractor misclassification. And a Wisconsin audit of Amazon Flex found that drivers were employees under the state’s unemployment insurance law.

But, until now, no state had taken on Amazon — the largest private-sector delivery provider in the U.S. — for misclassifying Flex drivers as independent contractors.

Amazon has designed the Flex labor model to push drivers to their physical limits and minimize their pay while hindering their access to rights and to courts.

Amazon Flex drivers deliver packages and groceries from Amazon warehouses and Whole Foods stores to the homes and businesses of Amazon customers across the U.S. These drivers, who use their personal vehicles (not Amazon-branded vans, which are driven by delivery service providers) to make deliveries, are among the most precarious workers in Amazon’s vast labor force.

That’s because, as my recent brief with the National Employment Law Project shows, Amazon has designed the Flex labor model to push drivers to their physical limits and minimize their pay while hindering their access to rights and to courts.

Central to Amazon’s Flex labor model is its labeling of Flex drivers as self-employed “independent contractors” who purportedly run their own delivery businesses. But New Jersey’s complaint details how Amazon uses the Flex app to dictate routes, monitor performance and unilaterally set pay — classic indicators of an employment relationship.

By misclassifying Flex drivers as independent contractors, Amazon maintains control over their delivery operations while offloading onto the drivers themselves the market risk and business costs that employers normally bear.

Flex driver costs include vehicle maintenance, gas and tolls. These are substantial and can push net earnings below minimum wage levels — but the “independent contractor” tag is meant to exempt Amazon from abiding by employment laws like the minimum wage.

By misclassifying Flex drivers as independent contractors, Amazon maintains control over their delivery operations while offloading the market risk and business costs that employers normally bear.

One New Jersey Flex driver organizing with Choferes de Flex Unanse and Make the Road New Jersey, who suffered injuries carrying a heavy Amazon package, said she hasn’t been able to see a doctor because “Amazon won’t provide health insurance or workers’ comp coverage.”

Misclassification cheats workers out of fair pay and benefits. It also robs states of critical tax revenue that funds unemployment insurance, paid leave and other safety nets. It forces law-abiding employers to compete with corporations that cut corners and is thus anticompetitive. When Amazon avoids its employer obligations, everyone else pays the price.

Meanwhile, like many corporations today, Amazon has also made it nearly impossible for Flex drivers to seek justice for mistreatment. Mandatory arbitration agreements prevent them from challenging their misclassification violations, such as wage theft, in court. Class action waivers bar the drivers from joining together to have their common claims decided as a group.

A team of attorneys has filed more than 30,000 individual wage and hour arbitrations on behalf of Flex drivers in three states, but, unlike with court judgments, Amazon requires that its individual arbitration decisions are not published and create no binding rules on future courts or arbitrators.

Misclassification cheats workers out of fair pay and benefits. It also robs states of critical tax revenue that funds unemployment insurance, paid leave and other safety nets.

States, however, are not bound by Amazon’s fine print. By stepping up, New Jersey has shown how state governments can demand that even the largest corporations comply with bedrock workplace protections and contribute their fair share. Increased investment in public labor enforcement is urgently needed so that others can follow New Jersey’s lead.

Ensuring that corporations are held accountable for independent contractor misclassification and the worker abuses that often accompany the practice is essential for building a good-jobs economy that guarantees workers on-the-job safety and livable wages and benefits.

New Jersey is demonstrating the important role states can play in taking on misclassification by behemoths like Amazon. It is time for other states to join New Jersey and stand on the side of the people who keep our communities and our economy running.

Maya Pinto is a senior researcher and policy analyst at the National Employment Law Project.

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Read the original commentary at thehill.com.