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In a decision that may cause a ripple effect on the entire gig economy, the Wisconsin Supreme Court has dismissed an appeal by Amazon to uphold a ruling classifying some delivery drivers as employees and not contractors.
The unanimous decision, which confirms a 2023 Wisconsin appeals court ruling, has far-reaching implications for workers' rights and unemployment insurance in the state.
The case centered on drivers in the Amazon Flex program, who use personal vehicles to deliver packages. The decision means the drivers are now considered part of Wisconsin's unemployment insurance system and entitled to jobless benefits if laid off. As a result, Amazon Logistics, a subsidiary of the online retail giant, may face a tax bill exceeding $200,000.
Justice Ann Walsh Bradley explained that the court dismissed the case because further review "would not serve any meaningful purpose" or contribute to the "further development of the law."
The explanation itself became a point of contention, however, with Justice Rebecca Bradley arguing that it "will only sow additional confusion.”
Employee rights and the gig economy
The decision has been hailed as a victory by labor unions and the Wisconsin Department of Workforce Development. Stephanie Bloomingdale, president of the Wisconsin AFL-CIO, called it a "win for working people," highlighting the importance of proper employee classification in the emerging gig economy.
The case originated when an Amazon Flex worker filed for unemployment insurance after being fired. This prompted the Department of Workforce Development to audit over 1,000 Amazon Logistics drivers between 2016 and 2018. The audit concluded that the majority of drivers were employees, not independent contractors, making them eligible for unemployment insurance payments.
Legal experts believe the ruling could have broader implications for similar cases involving gig economy companies.
“The gig economy is clogging up the court with all of this stuff, all the time,” said Samantha Prince, assistant professor of law at Penn State Dickinson College of Law and an expert on worker misclassification and the gig economy. “It’s just nuts. We really need this stuff to be resolved and stay resolved and stop with all the uncertainty for everybody.”
“The more cases that find that gig company drivers are employees, the more companies are going to have to pay their rightful share,” she added.
The debate over gig economy workers
The decision comes amidst a broader national debate on worker classification in the gig economy. Different states have reached varying conclusions on this issue. In 2023 a Virginia appeals court also ruled that Amazon Flex drivers were employees, while a California state appeals court allowed ride-hailing and delivery companies to continue treating their drivers as independent contractors.
Adding to the complexity, the US Department of Labor recently enacted a new rule aimed at preventing worker misclassification. This federal rule, which took effect on March 11, applies to wages and overtime but not unemployment compensation.
