John Harris filed a class-action lawsuit on May 16th against Nerium International and its founders, Jeff and Renee Olson, alleging the company misclassified its sales force as independent contractors instead of employees. The suit, filed in California, claims Harris and other "Brand Partners" were denied proper employee status as mandated by state law.
The complaint describes Nerium International as an "ever-growing pyramid" where affiliates, or Brand Partners, are pressured to recruit new members who then purchase company products. These new recruits are expected to do the same, creating a hierarchical structure allegedly driven by recruitment rather than retail sales. This business model mirrors concerns raised by investigative outlets in 2014, which noted Nerium's emphasis on affiliate auto-shipments over actual consumer purchases.
Harris alleges Nerium failed to provide required wages, including waiting time penalties, accurate wage statements, and proper record-keeping for hours worked. The suit also claims the company did not reimburse necessary business expenses incurred by affiliates. These allegations are framed under California's Unfair Practices Act, specifically Business and Professions Code Section 17200, which covers unlawful and deceptive business practices.
The core of the lawsuit rests on violations of the California Labor Code. By classifying participants as independent contractors, Nerium allegedly evaded obligations such as making employer-side tax payments and providing full wages. The suit contends that Nerium unlawfully required its alleged employees to purchase products, seeking the return of these funds. Harris's complaint outlines five distinct causes of action, with potential damages estimated at over $5 million for more than 500 proposed class plaintiffs.
The outcome of the case hinges on whether Nerium affiliates are deemed employees or independent contractors. Such a reclassification, if successful, could significantly alter the structure of the multi-level marketing industry, imposing employee benefits and obligations on companies that have historically operated with a more open recruitment model.
On January 25th, 2019, Harris's lawsuit was dismissed due to jurisdictional issues.