Multi-level marketing companies — commonly known as MLMs — have long relied on a business model that depends heavily on the work of independent distributors. But in California, calling a worker an “independent contractor” doesn’t make it so. Lebe Law has filed lawsuits against several MLM companies for allegedly misclassifying their workers and violating California’s wage and hour laws.
Note: This is general information, not legal advice for your specific situation.
The Lawsuits
The Avon Company (Filed February 6, 2026)
Lebe Law recently filed a putative class action against The Avon Company, the New York-based beauty and personal care products corporation, alleging that it misclassifies its California “Ambassadors” as independent contractors. Like other MLM structures, Avon’s compensation plan is built around recruiting a “downline” of other Ambassadors — and the complaint alleges that Avon exerts significant control over how its Ambassadors work, while simultaneously requiring them to absorb business costs that should legally fall on the employer. Among the alleged violations: failure to pay minimum wage and overtime, denial of meal periods and rest breaks, failure to reimburse business expenses (including enrollment fees, mandatory web-service fees, home internet, and cell phone costs), unlawful wage deductions, failure to provide accurate wage statements, and lack of workers’ compensation coverage. The complaint also alleges a violation of Labor Code § 925 — a law that prohibits employers from requiring California-based workers to agree to litigate their claims under another state’s law as a condition of employment.
A copy of the lawsuit can be found here.
Pre-Paid Legal Services, Inc. d/b/a LegalShield (Filed August 8, 2025)
Lebe Law filed a representative action under California’s Private Attorneys General Act (PAGA) against LegalShield and several related entities, including its CEO Warren Schlichting. LegalShield is an Oklahoma-based company that sells pre-paid legal service plans throughout California through a multi-level marketing structure. The complaint alleges that LegalShield misclassified its California-based workers as independent contractors while directing their work — including requiring workers to spend meal breaks selling plans and recruiting new salespeople. Among the alleged violations: failure to pay minimum and overtime wages, denial of meal periods and rest breaks, failure to reimburse business expenses such as personal cell phone and automobile use, inaccurate wage statements, and failure to timely provide personnel and payroll records.
A copy of the lawsuit can be found here.
It Works Marketing, Inc. (Filed July 19, 2023)
Lebe Law filed a putative class action against It Works!, a multi-level marketing company that sells health and wellness products through a network of distributors it classifies as independent contractors. The complaint alleges that It Works Distributors are, in practice, employees — subject to company policies, required to follow a strict compensation plan, prohibited from operating their own independent websites, and dependent on the company for their products, marketing tools, and web platform. Yet despite exercising this level of control, It Works allegedly failed to pay its distributors minimum wage and overtime, provide meal periods and rest breaks, reimburse business expenses (including cell phone, internet, and computer costs), or furnish accurate wage statements.
A copy of the lawsuit can be found here.
Family First Life LLC (PAGA Notice Filed January 30, 2026)
Lebe Law has filed a PAGA notice against Family First Life LLC and related entities on behalf of California-based insurance agents who were classified as independent contractors. Family First Life sells life insurance, investments, and annuities through a network of agents it calls distributors — but the notice alleges the company exercises substantial control over how those agents work, including scheduling mandatory group video training sessions, providing sales scripts and lead-generation guidelines, and directing agents in real time on sales approach. The notice further alleges that Family First required agents to purchase their own sales leads from third-party websites and transfer them into the company’s case management software — all without compensation. Among the violations alleged: failure to pay minimum wage and overtime, denial of meal periods and rest breaks, failure to reimburse business expenses (including leads, cell phones, internet, and computers), unlawful wage deductions, inaccurate wage statements, failure to pay final wages upon separation, failure to provide sick pay, and failure to provide workers’ compensation coverage.
Under PAGA, Lebe Law filed this notice with the California Labor and Workforce Development Agency on January 30, 2026. If the LWDA does not investigate, Lebe Law intends to file a representative action in court on behalf of all aggrieved employees.
Why MLM Workers May Actually Be Employees Under California Law
California uses a strict legal standard — known as the “ABC test” — to determine whether a worker is truly an independent contractor or should be classified as an employee. Under this test, a company must establish all three of the following to lawfully classify a worker as an independent contractor:
- (A) The worker is free from the company’s control and direction in performing the work;
- (B) The work is outside the usual course of the company’s business; and
- (C) The worker is customarily engaged in an independently established trade, occupation, or business.
MLM companies often struggle to satisfy this test. When a company controls its workers’ compensation structure, requires adherence to policies and training, prohibits independent marketing, and retains the right to terminate — the workers may well be employees in the eyes of California law, regardless of what their contracts say.
What Rights Do MLM Workers Have?
If you work or have worked as a distributor for an MLM company in California, you may be entitled to:
- Minimum wage for all hours worked, including time spent in trainings and meetings
- Overtime pay for hours worked beyond 8 in a day or 40 in a week
- Meal periods of at least 30 minutes for every 5 hours worked — or premium pay if those breaks were missed
- Rest breaks of at least 10 minutes for every 4 hours worked — or premium pay if those breaks were missed
- Reimbursement for business expenses, including use of your personal phone, computer, or vehicle
- Accurate wage statements reflecting all hours worked and wages earned
- Timely payment of all wages owed upon leaving employment
If you are interested in learning your rights as a current or former MLM worker in California — including as a distributor, ambassador, or insurance agent — feel free to contact Lebe Law for a free consultation. https://lebelaw.com/contact.
