Dive Brief:

• Three drivers who deliver for Amazon on a freelance basis filed a suit against the e-commerce behemoth in U.S. District Court in Seattle, arguing they should be compensated as employees, not contractors, because Amazon dictates how and when they work, the Seattle Times reports.

• The lawsuit names both Amazon.com Inc. and its Amazon Logistics local delivery unit, which works with freelance drivers as well as with delivery companies to provide same-day delivery. The drivers filing the suit are all part of the retailer’s “Amazon Flex” program, which issues delivery orders to hourly-rate contractors via mobile application, an approach similar to ride-sharing startup Uber.

• In a statement to the Seattle Times, an Amazon spokesperson said “[A]nyone can earn up to $25 per hour by delivering packages when and where they want. We launched the program last year and feedback from Flex drivers has been very positive — they really enjoy being their own boss.”

Dive Insight:

Retail delivery, a phenomenon arguably ignited and stoked by Amazon, is increasingly expected to be fast and cheap. That’s spawned a plethora of same-day delivery startups that have kept delivery prices sometimes amazingly low — many retailers have reasonable minimum order requirements and otherwise deliveries cost less than $10, which is less than FedEx charges for next-day delivery.

But a looming question remains: Are these delivery companies viable? Many are startups still running on the fumes of venture funding, rather than on profits. 

Amazon, meanwhile, has been working hard to drive down its delivery costs even has it hacks away at any friction for its customers. If drivers are found to be inappropriately compensated, the costs of Amazon’s same-day delivery will shoot up, defeating the purpose of the on-demand system.

Although many feel the “gig economy” is changing the definition of freelancers and workers, federal and many state state regulations are unlikely to veer too far from the fundamental requirements that dictate when and how companies must treat workers as employees rather than contractors through adequate compensation, including benefits.

“Amazon is yet another company that is saving on labor costs by hiring delivery drivers who perform the work that the company does and not calling them employees,” the plaintiffs' attorney Shannon​ Liss-Riordan told the Seattle Times.

The suit filed against Amazon is one of a number brought by drivers working for delivery companies in recent years. Uber earlier this year settled two major class action suits for close to a billion dollars that initially seemed to go far in securing its ability to treat its drivers as independent contractors, but a judge later rejected the settlement because it low-balled what drivers were entitled to under California law. (Liss-Riordan was also the plaintiffs' lawyer in that case.)