Amazon fined $200K for back taxes on unemployment insurance

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As employees work under peak pre-Christmas conditions, on Tuesday, December 19, 2023 at 9:45 a.m., the Wisconsin Supreme Court will review a Court of Appeals decision that overturned a Waukesha District Court injunction in a case involving Amazon Logistics, LLC.

The case concerns the employment status of 1,000 individual Amazon Logistics (Amazon) “delivery partners” contracted to provide delivery services via a smartphone app, according to court documents that note similarities to the arrangement between GrubHub and Uber drivers .

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

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

According to court documents, Amazon has been ordered to pay more than $200,000 in delinquent unemployment insurance taxes, plus penalties and interest.

Amazon then appealed the audit’s decision.

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

The issues before the Wisconsin Supreme Court are as follows:
1. Whether the Court of Appeals erred in interpreting three different statutory conditions for determining independent contract status under Wis. Stat. §
108.02(12)(bm)2 to be collapsed into one in the context of gig workers in the modern economy.
2. Whether the Court of Appeals erred in departing from the LIRC’s conclusions of law as to whether the 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 as to each of the more than 1,000 workers at issue during the one-day hearing set for the appeal of the basic determination of unemployment benefits.

Back in September, Amazon’s local counsel (Husch Blackwell attorneys Emily Logan Stedman and Eric K. Eisenman) filed a complaint with the Supreme Court, arguing that “The Court of Appeals erroneously collapsed and consolidated three of the four different statutory conditions that it found that missing”.

Amazon’s lawyers further argued that Amazon Logistics proved that the delivery partners were engaged in other work and were not economically dependent on
Amazon Logistics.

Additionally, Amazon’s attorney argued that it’s not just the Labor and Industrial Review Commission that is holding Amazon Logistics “to an undue burden that
violates due process,” but also noted that delivery partners performed most services at a time and place of their choosing.

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

Appellant further argues that the Supreme Court should therefore give due weight to the commission’s interpretations of Wis. Stat. §108.02(12), which defines “Employee” to mean any individual who is or has performed services for pay for an employing entity, regardless of whether the individual receives payment directly from the employing entity, except as provided in this paragraph.

The Wisconsin Law Journal reached out to Carter on Thursday for further comment.

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

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

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

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