Amway is being accused in a lawsuit of ripping off the people who peddle its products by failing to pay them minimum wage.
For California businesses, 2020 will be a year of reckoning. Sweeping new laws curbing long-time employment practices take effect, aimed at reducing economic inequality and giving workers more power in their jobs.
“Amway told me that being a so-called Independent Business Owner would give me a chance to be an entrepreneur and grow my own business — but instead I spent hours every month trying to grow theirs,” Orage said in an emailed statement.Amway didn’t immediately respond to a request for comment. It has touted itself as the “world’s largest direct selling company,” with $8.8 billion in sales and more than a million “Amway Business Owners” in its network.
According to Orage’s lawsuit, Amway is heavily focused on recruiting new distributors because of the sign-up and annual renewal fees they pay. IBOs are incentivized to bring in new ones because they receive a premium on Amway products purchased by their recruits. Orage claims the company closely controls the sponsorship process, encouraging IBOs to attend numerous trainings and coaching sessions, and its heavy involvement means IBOs should be treated as employees under California law.
Orage, who left Amway in 2019, says he made only two product sales during his four years with the company and alleges that he received no pay for the time he spent in training and trying, ultimately without success, to recruit new IBOs. He filed his complaint under California’s Private Attorneys General Act, which also allows him to seek government penalties for thousands of Californians who’ve worked for the company. If successful, Orage and other affected workers will receive a share of the recoveries. He’s backed in the case by the legal nonprofits Towards Justice and Justice Catalyst Law.Orage’s lawsuit is far from the first legal challenge to Amway’s business model. In 1979, the U.S.
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