New York City Mayor Zohran Mamdani’s new law could have huge ramifications for some employers
New York City is close to passing a law that would force Amazon and other delivery companies to hire thousands of contract couriers directly, instead of routing them through subcontractors. It's being covered as a fight between a mayor and a trillion-dollar company. For HR and total-rewards leaders, it's a preview of a compliance problem that has nothing to do with package delivery.
The bill, called the Delivery Protection Act, has majority sponsorship on the City Council and is expected to pass this fall, according to Bloomberg's reporting on the fight, published August 11. Backed by Mayor Zohran Mamdani, it would require companies running last-mile delivery hubs in the city, Amazon chief among them, along with FedEx and regional couriers, to directly employ the drivers who deliver their packages.
That single requirement is worth noting, because it isn't really about delivery vans. It's about who legally counts as the employer when the work is controlled by one company, but the paycheck comes from another.
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.
Old legal risk, new pressure points
Misclassification litigation isn't new. Employment attorney Kevin White told HRD, back when the Biden administration first tightened the federal contractor test, that these claims have been "a regular occurrence for some time."
That risk hasn't gone anywhere just because the rule is being rewritten again. What's changed is who's bringing the claims. A hospitality staffing firm recently sued several gig-economy platforms, arguing that classifying workers as contractors let its rivals undercut it on price. That's a competitor using misclassification as a business weapon, and there's no reason the same argument couldn't be aimed at a delivery or logistics network.
Amazon is fighting a related battle on the labor-relations side. The National Labor Relations Board is weighing unfair-labor-practice charges tied to a Teamsters organizing drive among contracted drivers, in a case that turns on whether Amazon is their joint employer. Amazon tried to halt that case in federal court on constitutional grounds and lost the bid earlier this year. It's the same control-and-liability question New York lawmakers are now trying to settle through legislation instead of litigation. And the scorecards and algorithmic routing that make the subcontracted delivery model work are recognizable to any HR leader who has built performance management around gig-style metrics rather than direct oversight.
What it means for HR
Most HR functions aren't managing a fleet of delivery vans, but plenty are managing a mix of employees, staffing-agency workers, and contractors spread across several states.
Worth checking now: where your contingent workforce sits against both the federal test and the strictest local test in any state where you operate, since the safest classification is the one that survives the toughest standard, not the loosest one. Worth modeling: what direct employment would cost for the contractor categories carrying the most risk, the way New York's budget office did for hotels before the Safe Hotels Act took effect. And worth remembering: the federal rule is still being finalized, more cities are watching how New York's experiment plays out, and the legal exposure only grows the longer a shaky classification structure stays in place.
Amazon happens to be the company in this particular headline. The underlying question, of who counts as an employer when a subcontractor is doing the controlling, is one a lot of HR teams have already answered for themselves without ever being forced to prove it in court.
