When a back injury should mean temporary disability benefits, but instead means choosing between rent and recovery—that's the hidden cost of worker misclassification. New Jersey's recent lawsuit against Amazon exposes how labeling employees as independent contractors strips away critical workers' compensation protections, leaving injured workers financially vulnerable during their most precarious moments.
The Invisible Wound: Lost Protections
The lawsuit filed by New Jersey Attorney General Matthew Platkin and Labor Commissioner Robert Asaro-Angelo alleges that Amazon has systematically misclassified its Flex delivery drivers since at least 2017, depriving them of the safety net that traditional employment provides. While Amazon markets the Flex program as offering "flexible earning opportunities," the reality for injured workers tells a different story.
One Flex driver featured in the lawsuit injured her back while picking up a package and couldn't work for 11 days. Because Amazon classified her as an independent contractor rather than an employee, she received no state-mandated sick leave or disability benefits. The financial pressure forced her to return to work before fully recovering—a dangerous choice that no injured worker should have to make.
The Compensation Gap
Worker misclassification creates a domino effect that devastates both individuals and state safety net systems. When companies like Amazon label employees as independent contractors, they avoid contributing to three critical funds:
State Disability Benefits Fund: The lawsuit seeks to recover unpaid monies and associated penalties and interest due to the State Disability Benefits Fund. Without employer contributions, injured workers who need temporary disability benefits find themselves without coverage precisely when they need it most.
Unemployment Compensation Fund: Amazon failed to make required contributions to the Unemployment Compensation Fund, meaning drivers who lose their gigs have no unemployment safety net to fall back on.
Temporary Disability and Family Leave Insurance: The lawsuit alleges Amazon failed to make required contributions to Temporary Disability and Family Leave Insurance funds. This denies workers paid time off for serious health conditions or to care for family members.
The Financial Fallout
The lawsuit estimates that New Jersey Flex drivers and state benefit funds have suffered millions of dollars in losses each year due to Amazon's alleged misclassification practices. But the numbers don't capture the human cost: workers driving in pain because they can't afford not to work, families going without income during medical emergencies, and individuals depleting savings to cover expenses that workers' compensation should handle.
One driver regularly paid tolls out of pocket, effectively lowering his pay below minimum wage. Another works over 40 hours weekly without receiving state-mandated overtime pay. These aren't isolated incidents—they're symptoms of a systematic shift of business costs and risks from a trillion-dollar corporation onto individual workers.
Beyond Individual Impact
The Century Foundation estimates that in 2021, New Jersey taxpayers lost $329.3 million from worker misclassification, including lost unemployment insurance contributions, Social Security and Medicare contributions, and federal and state income taxes. When companies avoid paying into workers' compensation systems, the burden ultimately shifts to taxpayers and legitimate businesses that follow the law.
Since the passage of bipartisan misclassification legislation in 2020, the New Jersey Department of Labor and Workforce Development has assessed more than $11.2 million in penalties for violations affecting over 13,500 workers. The state has previously reached settlements with Uber and Lyft over similar misclassification issues, demonstrating that this isn't an Amazon-specific problem—it's an industry-wide challenge in the gig economy.
The ABC Test and Workers' Rights
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". The lawsuit argues Amazon fails this test because it exercises significant control over how Flex drivers perform their work, dictating delivery methods, routes, and timing.
The case illustrates a fundamental question: When does "flexibility" become a euphemism for shifting legal responsibilities? Attorney General Platkin put it bluntly: "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. Amazon is looking out for itself".
What's at Stake
This unlawful misclassification deprives workers of their rights to minimum wage, mandated overtime, earned sick leave, and job-protected family leave. For workers in physically demanding delivery jobs—lifting packages, navigating stairs, driving for hours—the absence of workers' compensation protections isn't just unfair. It's dangerous.
The lawsuit seeks to stop Amazon's alleged practices, recover unpaid wages and benefits for drivers, impose fines and penalties, and reimburse state compensation funds. But beyond the legal remedies, this case raises essential questions about the future of work: Should companies be allowed to avoid workers' compensation obligations by simply relabeling employees as independent contractors? Who should bear the cost when workers get injured on the job?
As the gig economy continues to expand, these aren't theoretical questions. They're immediate realities for thousands of workers who deliver our packages, drive our rides, and perform countless other services—often without the safety net that traditional employment provides.
Key Takeaways
- Misclassification Eliminates Safety Nets: When workers are incorrectly labeled as independent contractors, they lose access to state disability benefits, unemployment insurance, and family leave protections that are critical during injuries or hardship.
- Real Workers, Real Consequences: The lawsuit documents actual Flex drivers who suffered injuries and lost wages because they lacked the protections guaranteed to employees, including one driver who worked through a back injury because she couldn't afford unpaid time off.
- Systemic Underfunding of State Programs: Amazon's alleged failure to contribute to New Jersey's workers' compensation funds has cost the state millions annually, shifting the financial burden to taxpayers and compliant employers.
- Financial Impact on Workers: Misclassified drivers pay business expenses out of pocket (gas, insurance, vehicle maintenance, tolls) while receiving no overtime pay, sick leave, or disability benefits—effectively subsidizing Amazon's business model.
- Broader Gig Economy Issue: With New Jersey having assessed over $11.2 million in penalties affecting 13,500+ workers since 2020, and previous settlements with Uber and Lyft, worker misclassification represents an industry-wide challenge beyond just Amazon.
- Taxpayer Losses: New Jersey taxpayers lost an estimated $329.3 million in 2021 from worker misclassification across all industries, including lost unemployment insurance, Social Security, Medicare, and tax contributions.
- Control Versus Independence: Despite labeling drivers as independent contractors, Amazon allegedly exercises significant control over delivery methods, routes, and timing—failing New Jersey's "ABC Test" for true independent contractor status.
- Legal Precedent Potential: Filed in Essex County Superior Court and seeking a jury trial, this case could establish important precedents for worker classification in the expanding gig economy, not just in New Jersey but nationally.
Recommended Citation: Gelman, Jon, Amazon's Misclassification Strips Workers' Safety Net (10/23/2025)
Blog: Workers' Compensation
LinkedIn: JonGelman
LinkedIn Group: Injured Workers Law & Advocacy Group
Author: "Workers' Compensation Law" West-Thomson-Reuters
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© 2025 Jon L Gelman. All rights reserved.
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