Online retail giant Amazon.com offers a service called ‘Amazon Prime Now’, in which courier drivers bring products right to the customer’s door within a one- or two-hour delivery window. Those who pay the $99 annual fee for Amazon Prime can enjoy free two-hour delivery (or one-hour delivery for a small fee). It’s the perfect business model for bringing in more profit and more customers, except for one small issue: labor cost.
The Lawsuit Against Amazon
Just a few weeks ago, four former drivers of Amazon Prime Now sued the company over payment violations. Among the complaints in their Class Action Lawsuit are alleged failure to pay overtime compensation, failure to reimburse business expenses, and all in all, failure to pay them at least minimum wage.
Yet Another Case of Employee versus IC Status
These couriers were not official Amazon Employees; rather, they were classified as Independent Contractors through Scoobeez, which holds its own contracts with Amazon. As ICs, they were required to pay for their own work expenses and provide their own vehicles. However, several problems arose from the demands of the Amazon-Scoobeez arrangement. Several elements of the contracted relationship gave the drivers cause to claim that they should have been classified as employees, not ICs, and therefore they were entitled to the associated employee benefits. For example, the drivers worked for hourly pay, and their work expenses caused their wages to fall below California’s $9 minimum hourly wage. They were also not paid time-and-a-half when they worked shifts longer than eight hours.
Cutting Corners – What’s Your Risk?
Like Amazon Prime Now, other companies in the courier service are using ICs to try to cut labor costs. Many trucking and delivery services now rely heavily on the independent contractor model, and this has not been without plenty of scrutiny and lawsuits. Every business wants to keep expenses at a minimum, but cutting corners by cutting labor costs could land you in a similar class action lawsuit. Are you running the same risk? If you are not certain that your business model is compliant with today’s laws, you need the assistance of Consultech.
Consultech is designed to help your company preclude claims and inquiries by bringing your independent contractor model into compliance with current legal requirements. Our 30 years of experience have granted us the wisdom and understanding to create a compliant independent contractor business model that will work for your needs, strengthen your business, and increase success for everyone involved. To get your company on the path to compliance now, call us at (800) 769-2994 or fill out our online contact form.