One Way Corporations Shield Themselves from Liability

A New York Times article discusses how Amazon shields itself from liability when drivers delivering items for Amazon get into accidents. The tactic is simple. Amazon considers its delivery drivers to be independent contractors, not employees. It makes all drivers sign an agreement that states the driver will “defend, indemnify and hold harmless Amazon” for “all loss or damage to personal property or bodily harm including death.” That's all it takes. Just a few words in an agreement shifts the social risk and cost for delivering goods onto the drivers.

The story began by describing an accident where an Amazon driver accidentally rear-ended a car with a 9-month-old baby strapped into a car seat. The baby died. The truck driver said that he was running late in making his deliveries and simply didn't see the Jeep in time to avoid the crash. Although Amazon claims it has no legal liability for the human toll, it keeps a tight grip on how the drivers do their work.

So far, 60 accidents including 10 deaths have been reported. When people sue, they often do not know the drivers work for Amazon. Their delivery vehicles are unmarked and not linked to Amazon.

By claiming workers as independent contractors, employers including Amazon, Uber, Lyft and many trucking companies. Not only can employer off load social risk and cost to workers, the employers avoid paying Medicare and Social Security taxes, and they are exempt from paying into state workers compensation.

Cost, risk and responsibility shifting from employers to workers is not new. In 2107, a Wall Street Journal article, The End of Employees, discussed the trend by many companies that are moving to get rid of employees by contracting out as much work as possible. The WSJ quoted a Virgin Airlines executive as saying “We will outsource every job that we can that is not customer-facing.” By then, Virgin had outsourced baggage delivery, heavy maintenance, reservations, catering and other jobs to contractors to reduce both cost and risk.

In the face of this kind of a ruthless, cost-cutting employment situation, one can only wonder how it will be possible to maintain income and quality of life over time. Employers simply do not want to mess with employees any more than is absolutely necessary. With the powerful twin incentives of cost cutting and social risk avoidance, employers will probably do a whole lot more employee slashing in the years to come.