(BLOOMBERG) -- Amway Corp. has long faced controversy over its multi-level marketing business model. Now, the family-owned direct sales giant is accused in a lawsuit of ripping off the people who peddle its products by failing to pay them minimum wage.
It’s part of a wave of cases in California over who counts as an employee, a battle that’s heated up with a new state law that makes it harder for companies to classify workers as independent contractors to avoid giving them better pay and benefits.
Advertisement - story continues below
Amway relies on what it calls “independent business owners,” who pay fees and buy its merchandise to sell to others, historically friends and neighbors. “Outside salespersons” are not typically treated as employees under California law, but William Orage claims in a suit filed Friday in state court in Oakland that his “principal task” at Amway was not sales, but the recruitment of new IBOs to pay Amway more fees and buy more products.