Attorney General Matthew J. Platkin and New Jersey Department of Labor and Workforce Development Commissioner Robert Asaro-Angelo have sued e-commerce and technology company Amazon for misclassifying Flex delivery drivers as independent contractors and unlawfully depriving them of rightful wages, benefits, and a host of other legal rights and protections afforded to employees.
An eight-count suit was filed by the state in Essex County Court against the Seattle-based company.
The case also alleges that Amazon shifted the risk of doing business and those associated expenses to Flex drivers, and, among other things, failed to make required contributions to the Unemployment Compensation Fund and the State Disability Benefits Fund. As a result of these violations, the lawsuit estimates that New Jersey Flex drivers and these funds have suffered millions of dollars in losses each year.
The state claims Amazon’s Flex drivers deliver packages for the e-commerce giant to both commercial and residential locations, using their own vehicles and paying for their own expenses, including gas, insurance, maintenance, and tolls. The state claims Amazon “exercises significant control over how drivers perform their work, including the time, method, and manner of how deliveries are made.”
Thousands of Flex drivers have been working in New Jersey since at least 2017. NJDOL’s investigation into Amazon’s Flex program began after it received applications from Flex drivers for unemployment and temporary disability benefits.
In a statement, Amazon spokesperson Mary Kate Paradiso said the lawsuit “is wrong on the facts and the law” and misrepresents how Flex works.
“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,” Paradiso said in a statement. “This flexibility is one of the main reasons many drivers say they enjoy the program.”
Gov. Phil Murphy’s administration has been aggressive in addressing employee misclassification in New Jersey. The state has enacted several legislative measures aimed at addressing this issue, including the establishment of the Office of Strategic Enforcement and Compliance within the NJDOL, the creation of a database to track payroll projects, and the introduction of a misclassification penalty. The legislation has empowered authorities to implement stop-work orders at worksites where misclassification is detected.
In September, the ride-sharing company Lyft paid $19.4 million to the New Jersey Department of Labor and Workforce Development after an audit found that the company improperly classified more than 100,000 drivers as independent contractors, depriving them of safety-net benefits by failing to make required contributions from 2014 to 2017.
“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. Amazon is looking out for itself,” said Platkin. “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.”
“Amazon’s misclassification of Flex drivers is 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.”
The suit was filed in the Superior Court of Essex County, Law Division and seeks a trial by jury. In New Jersey, most workers are generally presumed to be employees, rather than independent contractors, unless a business can satisfy all three criteria of what is commonly referred to as the “ABC Test.” Businesses must establish that:
“(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact;
(B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
(C) Such an individual is customarily engaged in an independently established trade, occupation, profession or business.”
Since 2020 when a bipartisan law was signed providing additional tools to deter worker misclassification, NJDOL has assessed penalties to companies found to have misclassified their workers, including a penalty of not more than 5% of misclassified workers’ gross earnings over the past 12 months, which goes directly back into workers’ pockets. To date, NJDOL has assessed $11,223,560.61 for 13,567 workers.
