Amazon fined $200K for delinquent unemployment insurance taxes, case now before Supreme Court

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As Amazon.com crews are working under peak pre-Christmas conditions, on Tuesday, Dec. 19, 2023 at 9:45 a.m. the Wisconsin Supreme Court will review a Court of Appeals decision that reversed a Waukesha County Circuit Court order in a case involving Amazon Logisitics LLC.

The case concerns the employment status of 1,000 individual “delivery partners” Amazon Logistics (Amazon) contracted with to provide delivery services through a smartphone application, according to court documents which noted similarities to the GrubHub and Uber drivers’ agreement.

“These individuals used Amazon’s “Flex” smartphone app to select “blocks” of packages that the individuals would pick up from one of Amazon’s distribution centers in Milwaukee and deliver for a set fee, using their personal vehicles,” officials noted.

A Wisconsin the Department of Workforce Development audit revealed that from 2016-2018, Amazon’s Flex program “inappropriately classified these individual delivery partners as independent contractors rather than employees,” officials said.

According to court documents, Amazon was ordered to pay more than $200,000 in delinquent unemployment insurance taxes with related penalties and interest.

Amazon then appealed the audit determination.

An evidentiary hearing was held before an administrative law judge, who concluded the Department of Workforce Development properly classified the delivery partners as employees pursuant to Wis. Stat. § 108.02(12).

The issues before the Wisconsin Supreme Court are as follows:
1. Whether the Court of Appeals erred in construing three distinct statutory conditions for determining independent-contract status under Wis. Stat. §
108.02(12)(bm)2 to collapse into one in the context of gig workers in the modern economy.
2. Whether the Court of Appeals erred in deferring to LIRC’s legal conclusions about whether evidence was admissible and sufficient to satisfy Amazon Logistics’ burden of proof.
3. Whether the Court of Appeals erred in holding that Amazon Logistics was required to present evidence about each of the 1,000-plus workers at issue during the single-day hearing set for its appeal of the underlying unemployment benefits determination.

In September, local counsel for Amazon (Husch Blackwell attorneys Emily Logan Stedman and Erik K. Eisenmann)  filed a brief with the Supreme Court arguing “The Court of Appeals erroneously collapsed and conflated three of the four distinct statutory conditions it found absent.”

Amazon’s attorneys further argued Amazon Logistics proved that delivery partners engage in other work and were not economically dependent upon Amazon Logistics.

Additionally, Amazon’s counsel argued not only did the Labor & Industry Review Commission hold Amazon Logistics “to an impossible burden that violates due process,” but also noted delivery partners performed most of the services in a location and time of their choosing.

In response, Jennifer P. Carter, attorney for defendant-appellant Wisconsin Labor and Industry, filed a brief with the Supreme Court arguing delivery service workers performing services for Amazon Logistics Inc. did so as employees.

Additionally, the appellant argued the Supreme Court should therefore afford due weight to the commission’s interpretations of Wis. Stat. §108.02(12), which stipulates Employee” means any individual who is or has been performing services for pay for an employing unit, whether or not the individual is paid directly by the employing unit, except provided in this paragraph.

The Wisconsin Law Journal reached out to Carter on Thursday requesting additional comment.

“The commission does not comment on pending litigation,” Carter said.

Citing her firm’s policy, Stedman also declined to comment.

The Wisconsin Law Journal also reached out to Amazon requesting comment. No response was received prior to publication.