New York City leaders are challenging the business model that underpins Amazon's extensive delivery network with a proposed bill that could have significant repercussions beyond the city limits. The "Delivery Protection Act," championed by City Council members including Mayor Zohran Mamdani, aims to compel logistics companies like Amazon and FedEx to directly hire the drivers who deliver packages.
Currently, many drivers delivering packages for Amazon operate not as direct employees but as workers for third-party "delivery service partners" (DSPs). Proponents of the bill argue this structure allows Amazon to control workers while sidestepping employment responsibilities, such as wage and safety protections, and potentially hindering union organizing efforts. Julie Su, New York's deputy mayor for economic justice, stated that this model has contributed to precarious and insecure jobs for working people, threatening established labor protections.
Amazon, however, has voiced strong opposition, warning that the bill could lead to the relocation of its delivery operations outside the city, resulting in job losses and increased delivery times. The company asserts that the legislation threatens small businesses that serve as DSPs and puts thousands of jobs at risk. Kelly Nantel, an Amazon spokesperson, said the company is committed to creating good jobs but believes the bill would undermine this commitment, potentially forcing Amazon to "consider relocating delivery operations outside of the city."
This legislative effort echoes broader concerns about the "fissured workplace" model, a concept described by labor academic David Weil. This model involves large companies outsourcing work to smaller firms that compete against each other, which Weil argues helps cut costs at the expense of worker wages and safety. While FedEx has employed outsourcing for some time, Amazon's scale and algorithmic management of workers have taken this approach to a "new, higher level," Weil noted.
Drivers themselves describe a system where Amazon exerts significant control despite claims of not being direct employers. Luc Albert Rene, who delivers for an Amazon DSP, noted that while he wears an Amazon uniform and delivers Amazon packages, he is employed by a third party. He recounts confusion from customers when he explains Amazon does not directly employ him. Rene argues that Amazon dictates schedules and delivery parameters, leaving DSPs to handle issues like equipment maintenance. "All of these problems should point back at Amazon, but because of the way they have the business set up, they constantly tell us to talk to our DSP about it," Rene said.
Labor unions, such as the International Brotherhood of Teamsters, are significant backers of the Delivery Protection Act. For the Teamsters, organizing Amazon drivers is seen as crucial, given the company's impact on wages and working conditions across the logistics industry, including at UPS. The fragmented nature of the DSP model presents a challenge for unionization, as gains made with one DSP can be lost if Amazon drops that contractor. The union has previously stated that Amazon dropped a DSP it had organized, attributing the move to poor performance while the union cited it as an anti-union tactic.
Beyond labor concerns, city officials point to safety issues. A report from the city's Office of the Comptroller indicated an increase in injury-related crashes in areas with new e-commerce facilities. The proposed law aims to improve safety by making companies like Amazon accountable for delivery quotas, potentially reducing dangerous driving practices. The legislation also includes requirements for last-mile facilities to obtain licenses and adhere to safety and training standards.
DSP owners, however, express concern that the bill's direct-hire mandate would eliminate their businesses, which they have invested heavily in. Bashar Yazgi, owner of DSP Logistics XPress, compared the DSP system to franchise models in other industries, emphasizing his company's focus on safety and impeccable accident record. Rudy Cazares, another DSP owner, believes the bill is primarily a mechanism for the Teamsters to organize Amazon, stating, "When you have a direct-hire mandate, it’s just a very slick way of eliminating us, the small business owners, to be able to go after Amazon."
Amazon maintains that safety has improved within its network, citing a decrease in serious crashes and the use of driver-monitoring technologies. The company states that DSP managers are alerted to unsafe behavior, and it claims serious crashes in its delivery network dropped by 23% last year.
The debate also touches upon the long-term career prospects in the logistics industry. While Amazon drivers at DSPs can expect to earn around $24 per hour, unionized UPS drivers, under their contract, can reach significantly higher pay rates, with top earners potentially exceeding $100,000 annually with overtime. Labor advocates suggest Amazon's model creates pressure on the established, higher-paying career paths offered by unionized companies like UPS.
Federal regulatory efforts to classify Amazon as a "joint employer" alongside its DSPs have faced political shifts, with recent federal policy changes potentially offering Amazon more flexibility. The New York City bill represents a significant local effort to challenge the DSP model in a major market. With strong support on the City Council, the legislation is poised for passage, signaling a potential shift in how e-commerce deliveries are managed.
Responding to concerns about Amazon potentially withdrawing operations, Deputy Mayor Su emphasized that while the city desires business retention, "we will not sacrifice health and safety as a cost of doing business."