In a complaint filed in California state court, a former Independent Business Owner (“IBO”) alleges that Amway failed to pay him and other workers minimum wages, provide them with the tools needed to do their job, and maintain appropriate employment records. The plaintiff seeks civil penalties on behalf of himself and other California workers under California’s Private Attorneys General Act.
Multi-level marketing (MLM) companies often employ workers as independent contractors, allowing them to avoid paying IBOs fair wages, workers compensation insurance and additional employee benefits. Not only do MLMs often avoid paying the costs of having employees, but they also profit by charging IBOs fees and pressuring IBOs to make product purchases. Although Amway bills itself as a direct sales company, the suit alleges that IBOs spend the vast majority of their time trying to recruit new IBOs to Amway, and make few if any product sales.