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Amazon Sparks Macy’s Lawsuit

Amazon once again came under fire in an antitrust hearing, as a UPS driver and Teamsters Union member testified to a House Subcommittee that thousands of UPS and USPS workers were “under attack” by the e-commerce giant. And that’s not all—the e-commerce giant is at the center of a legal crossfire between Macy’s and its landlord over a billboard above the department store’s iconic Herald Square flagship.

On Tuesday, Dan Gross, a feeder driver who transports trailers full of packages between UPS delivery hubs, and to and from other large UPS customers, decried to the House Subcommittee what he described as Amazon’s ability to exert monopolistic power over its own contractors and workers. Throughout the hearing, he highlighted examples of how Amazon allegedly drove down wages, set new terms on operating hours and delivery days, limited interaction between employed and competing drivers and shifted responsibility to delivery partners.

Dan Gross testifies in front of the House Antitrust, Commercial and Administrative Law Subcommittee.
Dan Gross testifies before the House Antitrust, Commercial and Administrative Law Subcommittee. House Committee on the Judiciary

The average starting wage for an Amazon package delivery driver near Gross’s place of residence in Edison, N.J., is approximately $17.50, he said. That’s less than half the average $38.35 that a similarly located UPS package car driver makes without factoring in benefits.

Amazon’s demands also infringed on the Teamsters’ collective bargaining agreement with UPS, Gross testified.

“For example, instead of using feeder drivers within its existing network, UPS has succumbed to Amazon’s demand to utilize subcontractors and independent operators who are not subject to the collectively bargained for rules that are designed to keep drivers and the public safe,” Gross said, adding, “Unbelievably, UPS is allowing Amazon to do our work.”

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The local Teamsters Union won grievance settlements to address this and similar contract battles, while some grievances remain unresolved.

It’s common for a feeder driver to gain access to a customer’s facilities while they await shipments, Gross said. While that used to be the case when picking up Amazon deliveries, he noted that the tech titan halted that practice to limit the interaction between UPS and Amazon drivers, both employed or contracted.

“It seems clear to us feeder drivers that Amazon did this to exert control over the information their employees or contractors can share with each other,” Gross said. “I know from conversations with drivers in the industry, that the drivers Amazon uses are paid varying rates that are below industry standards, possibly by as much as half, even before benefits are factored in. I have even been told that sometimes Amazon restricts the ability of the so-called independent contractors to carry backhaul loads, forcing them into non-paying empty loads on their return trip.”

Amazon’s e-commerce dominance essentially gives the organization leverage over UPS, USPS, DHL and other major carriers, Gross alleged. Two contracts (one in 2012 with USPS and another in 2018 with UPS) accommodated Amazon’s demands for weekends package deliveries.

The panel convened Tuesday for its fourth hearing on reviving competition as Congress seeks to potentially amend current antitrust laws, gathering insights from Gross, a hospital union worker, an economist, two law professors and the Federal Trade Commissioner.

Amazon is one of four “Big Tech” firms including Google, Apple and Facebook under investigation by the U.S. House of Representatives. In June, the subcommittee introduced five bills that could break up  Amazon and others based on the size and dominance of their businesses.

Additional parties giving testimony at the hearing included Dr. Brian Callaci, chief economist at think tank Open Markets Institute; Bruce Kobayashi, a chair in law and economics, Antonin Scalia Law School, George Mason University; Nila Payton, medical administrative assistant, University of Pittsburgh Medical Center; Eric Posner, professor of law and research chair, University of Chicago Law School; and Christine Wilson, commissioner at the Federal Trade Commission (FTC).

Gross alleged that Amazon built its last-mile delivery network in order to “exert total control” while shifting all risk and responsibility onto smaller businesses and workers. He referred to the fact that while the drivers are in Amazon-branded vehicles and wear Amazon colors, they are employees of one of nearly 1,000 Delivery Service Partner (DSP) contractors, and not the Seattle company itself.

Callaci agreed with Gross, pointing out that Amazon sets the rates its partners can charge, the routes they drive, and their labor practices.

“This kind of domination and control hurts workers too,” Callaci said. “Small businesses with no control over their own prices, costs and profits have little room to improve the wages and working conditions they offer workers, while employees of these firms lack legal rights against the corporation that actually controls their working conditions,”

The “gig economy” doesn’t help the cause of small businesses either, according to Callaci.

“Similar restrictive contracts are used to misclassify workers as independent businesses, stripping workers of all employment rights,” Callaci said. These workers risk treble damage, antitrust prosecutions and losses if they try to unionize. To return balance the economy action is urgently needed to disperse concentrated power and prevent the abuse of workers.”

He cited the recent Executive Order on Promoting Competition in the American Economy as an important step in bringing this balance, which included a directive to the FTC to consider issuing rules banning non-compete clauses.

Tying back into the Amazon issue, Callaci also recommended that the FTC further extend the Executive Order by considering the restriction of exclusionary contracts and other vertical restraints and restrictive contracts by dominant firms to control non-employee independent contractors.

UPS driver Dan Gross testified to a House Subcommittee, alleging Amazon used monopolistic power to depress wages and set delivery terms.

The Teamsters aren’t done with Amazon

In June, the Teamsters Union voted in favor of The Amazon Project, a resolution to scale up efforts to organize Amazon workers. The union, which represents 1.4 million workers in trucking, warehousing and other logistics industries, created a dedicated Amazon division determined to help the business’s warehouse workers and delivery drivers organize and demand better working conditions.

Much of the Teamsters buzz came shortly after an Amazon warehouse unionization drive in Bessemer, Ala. failed to push through when a majority of the facility’s employees voted against organizing. However, that saga remains unsolved as a National Labor Relations Board (NLRB) assessment called for a new election. The board indicated that Amazon interfered in the vote by asking the USPS to install a mailbox for ballots on premises, and also distributing “vote no” paraphernalia on site to employees in front of managers.

Amazon faced another hearing with the NLRB on Tuesday regardin charges that it illegally fired two of its most outspoken internal critics, user experience designers Emily Cunningham and Maren Costa, last year. The virtual hearing is expected to last several days.

The e-commerce giant could still reach a settlement with Cunningham and Costa during the trial. If a trial proceeds, either party can appeal the judge’s ruling to the NLRB board in Washington.

Macy’s sues landlord to block Amazon billboard

Amazon has drawn the ire of Macy’s for perhaps overstepping some competitive boundaries. The department store recently sued Rockaway KB Company, LLC, the landlord of its Herald Square flagship, to block a potential deal that could see Amazon take over a 2,200-square-foot billboard above the store—one which Macy’s has occupied since 1963.

Macy’s chose not to renew the billboard’s lease after it expired in August 31 as the parties could not agree on renewal terms. However, the retailer still reserves some rights over who is allowed to advertise on its billboard, the lawsuit says. The suit indicates that the defendant is prohibited from entering into an agreement with a Macy’s competitor to advertise on the billboard, with this prohibition running “forever.”

The suit alleges that Rockaway was in discussions with a very “prominent online retailer” concerning a billboard ad as far back as May 21.

“The damages to Macy’s customer goodwill, image, reputation and brand should a ‘prominent online retailer’ (especially Amazon) advertise on the billboard are impossible to calculate,” the lawsuit states.

Since Amazon and other online retailers are Macy’s direct competitors, the billboard ad’s negative impact on the department store retailer would be “immeasurable,” according to the suit.

Macy’s said it expects its long legacy of leveraging the advertising space to work in its favor. “Since the early 1960s Macy’s has placed a billboard sign on the building adjacent to our flagship store at the corner of Broadway and 34th Street,” a spokesperson said in an emailed statement. “Macy’s continues to have rights relating to advertisements at that location. We expect to realize the benefits of these rights and have asked the court to protect them. As the matter is in litigation, the company will not have any further comment.”

One of the most iconic names in retail, Macy’s has sought to bring the competition back to Amazon ahead of the holiday season, recently partnering with the now-revived Toys ‘R’ Us. Additionally, the department store is currently onboarding 76,000 employees in stores, call centers, distribution, and fulfillment centers ahead of what’s expected to be a hectic holiday season.