992 N.W.2d 168
Wis. Ct. App.2023Background
- Amazon Logistics ran the "Amazon Flex" program: individuals ("delivery partners") used a smartphone Flex app to accept timed "delivery blocks," pick up packages at an Amazon warehouse, and deliver them for a fixed "service fee."
- Delivery partners scanned packages at pickup, received a suggested route but were free to choose their own route, used their own vehicles and smartphones, and were required by contract to maintain devices, insurance, fuel, etc.
- DWD audited >1,000 Flex delivery partners for parts of 2016–2018, concluded nearly all were "employees" under Wis. Stat. §108.02(12), and assessed ~ $205,000 in unemployment taxes, penalties, and interest.
- LIRC upheld DWD; Amazon sued for review. The circuit court set aside LIRC, finding Amazon met all nine factors. The Department and LIRC appealed.
- The Court of Appeals held Amazon proved five of the nine statutory factors (b, d, e, g, h) but not six, so the delivery partners qualify as employees for unemployment-tax purposes; it reversed the circuit court and reinstated LIRC.
Issues
| Issue | Amazon's Argument | Department/LIRC's Argument | Held |
|---|---|---|---|
| Whether delivery partners are "employees" under Wis. Stat. §108.02(12) (need ≥6 of 9 factors plus freedom from control) | Delivery partners are independent contractors; Amazon satisfied all factors | Delivery partners are employees; Amazon failed to prove six factors | Court: Amazon proved 5 factors (b,d,e,g,h) only; workers are employees; LIRC correct |
| Factor (a): "advertises or otherwise affirmatively holds...out as being in business" | Registration on Flex (profile/availability) = holding out | Flex registration only notifies Amazon, not the public or customers | Not satisfied — registration to a single platform/employer ≠ public holding out |
| Factor (b): "maintains own office or performs most services in location chosen by individual and uses own equipment" | Drivers’ vehicles count as "office"; drivers choose routes | Vehicle is not an "office"; pickup/delivery locations not chosen by drivers | "Office" is a fixed place (not vehicle); but drivers choose routes and spend most block-time driving → factor satisfied (use of own vehicle/phone satisfied) |
| Factor (e): "obligated to redo unsatisfactory work ... or subject to a monetary penalty" | Agreement’s indemnity exposes drivers to monetary liability for negligence/misconduct → monetary penalty | Indemnity does not specifically address "unsatisfactory work" or was not enforced | Indemnity "speaks to" unsatisfactory work and exposes drivers to monetary liability; contractual obligation alone suffices → factor satisfied |
| Factor (g): "may realize a profit or suffer a loss" | Drivers can profit or lose across blocks (fees vs. vehicle/phone/fuel/repair costs) | Mere theoretical possibility is insufficient; must be realistic risk of loss | Adopted test: realistic possibility of profit or loss over course of contract; record supports realistic profit and realistic risk of loss → factor satisfied |
| Factor (h): "recurring business liabilities or obligations" | Recurring costs (data plan, fuel, insurance) are business obligations under the contract | Such costs must be incurred solely for business to qualify | Recurring liabilities need not be solely personal; contractual, recurring obligations related to the business qualify → factor satisfied |
Key Cases Cited
- Tetra Tech EC, Inc. v. DOR, 382 Wis. 2d 496 (2018) (agencies’ legal conclusions reviewed de novo; courts may give due weight to agency expertise but do not defer)
- Kalal v. Circuit Court for Dane Cnty., 271 Wis. 2d 633 (2004) (statutory interpretation begins with plain meaning)
- Keeler v. LIRC, 154 Wis. 2d 626 (1990) ("advertising/holding out" is probative of independent-contractor status)
- Gilbert v. LIRC, 315 Wis. 2d 726 (2008) (burden shifts to employing unit to prove statutory exemption once services for pay are shown)
- Princess House, Inc. v. DILHR, 111 Wis. 2d 46 (1983) (chapter 108 construed to effectuate remedial unemployment-compensation purpose)
- DOR v. Menasha Corp., 311 Wis. 2d 579 (2008) (application of statute to undisputed facts is a question of law reviewed de novo)