A federal labor regulator has classified Amazon Inc. (NASDAQ:AMZN) delivery drivers as employees, potentially increasing the company's responsibility for working conditions within its logistics network.

What Happened: On Thursday, a regional National Labor Relations Board or NLRB director said that Amazon is a joint employer of some of its contractor delivery drivers, according to a press release shared by the Teamsters union.

This decision could compel Amazon to negotiate with the union.

Amazon has previously argued that it is not accountable for alleged union-busting or required to negotiate with driver unions, as the drivers work for third-party contractors known as Delivery Service Partners (DSPs).

However, the NLRB's decision contradicts Amazon's stance, citing the company's failure to negotiate in good faith after delivery drivers in Palmdale, California, voted to unionize in 2023.

The NLRB also found that Amazon had unlawfully targeted drivers in Palmdale with termination threats and held illegal captive audience meetings.

"Amazon drivers have taken their future into their own hands and won a monumental determination that makes clear Amazon has a legal obligation to bargain with its drivers over their working conditions," stated Teamsters General President Sean M. O'Brien.

However, Amazon disputed the union's interpretation of the situation.

"The regional office has indicated that it thinks some of the remaining allegations should be decided by an administrative law judge," said Amazon spokesperson Eileen Hards in an email statement to The Washington Post. "As we have said all along, there is no merit to the Teamsters' claims."

Why It Matters: Earlier this month, during Amazon's second-quarter earnings call, the e-commerce giant CEO Andy Jassy noted that this quarter their "speed of delivery for Prime customers has been faster than ever before."

Amazon reported second-quarter net sales of $148 billion, reflecting a 10% year-over-year increase. However, this figure fell short of the Street consensus estimate of $148.56 billion, according to data from Benzinga Pro.

The e-commerce giant's ambitious plan to deploy 100,000 electric delivery vans by 2030 is lagging also behind, with only about 19,000 vans deployed as of 2023. The company is also in a race with Walmart to be the first to conquer the skies with drone delivery.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.