Why the Amazon-New York delivery fight is really an HR story

A pattern, not a one-off

New York has done this before. Its Safe Hotels Act, which took effect in 2025, requires hotels with 100 or more rooms to directly employ “core” staff such as housekeepers and front-desk agents rather than using subcontractors, according to the city’s own budget office analysis of the law. Chicago floated a similar delivery bill last year. The logic behind both is the same: if a company sets the terms of the work, it should also carry the legal obligations of employing the people who do it.

Meanwhile, the federal government is loosening the same standard. In February, the Department of Labor proposed rescinding the Biden-era independent contractor rule and reviving an easier, “core factors” test for classifying workers as contractors under the Fair Labor Standards Act. A companion rule narrowing when two companies count as joint employers is moving through the same process.

The result is a gap between what Washington will allow and what individual cities are willing to accept, and it’s getting wider. A classification structure that clears the federal bar can still fail a New York City Council test, a California ABC test, or a state unemployment insurance audit. Wisconsin’s Department of Workforce Development spent years in court arguing that Amazon’s delivery partner program misclassified drivers who should have counted as employees for unemployment insurance purposes. That case is a small preview of the exposure direct-employment mandates like New York’s are now trying to write into law.

The benefits math behind the fight

Cost is a big part of why companies build networks of small, contracted delivery firms instead of hiring drivers themselves, and health benefits show why. Bloomberg found that employees of one Amazon delivery contractor in New York, COPR Industries, pay $266 a month for individual coverage, or 43% of the total plan cost. Covered workers nationally pay an average of 16% toward single coverage, according to KFF’s 2025 Employer Health Benefits Survey. Amazon itself can offer warehouse employees plans for as little as $20 a month because it spreads the premium across a much larger, directly employed workforce.

That gap is the arbitrage the subcontracting model runs on, and it’s what the New York bill is designed to close. David Weil, a Brandeis University professor who ran the Department of Labor’s Wage and Hour Division under President Obama, told Bloomberg that benefits costs, liability insurance, and workers’ compensation exposure would likely rise if Amazon had to bring its delivery drivers onto its own payroll. As he put it, “New York is trying to draw a line in the sand” over who counts as the employer.