Amway sued over contractor business model

U.S. & World

Amway headquarters in Ada, Michigan. (File)

GRAND RAPIDS, Mich. (WOOD) — A California man is suing Amway Corp., saying that the Ada-based company should be treating salespeople as regular employees rather than independent contractors.

In a lawsuit filed in northern California’s Alameda County last week, William Orage of Vallejo alleges that because of the requirements by which Amway’s “independent business owners” have to abide and the way they are most likely to make money, they constitute employees.

The suit argues that Amway salespeople are urged to spend hours of unpaid time trying to recruit others so they can collect commissions from recruits’ sales. It alleges that is a violation of California’s minimum wage law — and, the suit adds, because Amway doesn’t track those unpaid hours, it is violating requirements to maintain payroll records.

The lawsuit also says that the annual fees paid to become and remain a salesperson grant access to the tools needed to do the job. It calls that a violation of California’s requirement that employers provide tools and equipment to workers.

Orage said that between January 2015 and February 2019, he sunk some $50,000 into buying Amway merchandise to sell, but only ended up making two sales — both of which were to his mother. He also said he paid hundreds of dollars in fees to keep being a salesperson. During that time, Orage said, he received $12,671 from the company, most of which he said was rebates for products he bought for himself. He said he never managed to sign up any recruits.

In a Wednesday statement to News 8, Amway said its contractors are given the discretion to spend as much or as little time working as they choose. It added that when he signed on, Orage signed a contract agreeing he was an independent contractor.

“His lawsuit is without merit, and Amway will vigorously defend itself against his false claims,” the statement read in part, also noting that a 2019 California law on contractors exempts direct sellers from being treated as employees.

Orage is asking the court to grant him and other Amway salespeople civil penalties, attorney fees, interest and any other relief they may be due.

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