Amazon Flex misclassified a driver as an independent contractor and is now required to pay unemployment insurance taxes for all similarly classified Flex drivers, according to an opinion by the Virginia Court of Appeals on Sept. 26.

The case involves Ronald Diggs, a Flex delivery driver who filed a claim for unemployment in July 2019 after working for Amazon Flex, part of Amazon. An investigation by the Virginia Employment Commission at the time found him to be an employee; however, Amazon appealed the finding.

Diggs used his own car for deliveries, according to court filings. He would get packages to deliver by competing with other drivers over them via an app. Diggs also followed rules imposed by Amazon such as following delivery routes as suggested by the app, finishing deliveries by 9 p.m. and photographing deliveries once they were made.

The ruling upholds decisions by the Virginia Employment Commission and the Circuit Court.

“On appeal, Amazon argues that the commission’s findings were unsupported by the evidence and the law. We disagree,” Judge Dominique Callins wrote in the Court of Appeals decision.

“The evidence supports the commission’s determination that Diggs was an Amazon employee,” Callins wrote. “What is more, the commission’s findings, including its individual control factor determinations, are conclusive and binding on this court.”

In a separate analysis of the opinion, Eric Rumbaugh, a partner at law firm Michael Best, said this case is very fact-specific and based on elements of control Amazon exerted over the workers.

“I think it highlights the importance of divesting yourself of control if you want people to be independent contractors,” Rumbaugh said. “Realize that normal types of interactions you have with a vendor are going to look like ‘control’ to taxing bodies because they want your vendors to be employees, and so you should be mindful of that when analyzing your elements of control.”

The Court of Appeals looked at 20 factors to gauge the degree of control Amazon had over Diggs and similarly situated workers. They included:

  • Whether workers must follow a specific sequence when completing tasks.
  • If the work takes place on the company’s premises.
  • Who sets hours worked.

In its ruling, the court found Amazon required drivers to follow specific instructions. It also took issue with the company’s arguments that it does not retain Flex drivers on a regular or continuing basis.

“Significantly, Diggs worked solely as a Flex driver for the 10 months that he actively performed services, in an arrangement which, the commission found, was more ‘akin to the temporary employee, hired to meet a specific business need,’” according to the opinion.

And while drivers were not full-time traditional workers, the court found they were also unlike independent contractors who work when and for whom they choose. It cited the specifications for package delivery.

Another finding: Amazon controlled the place of work of Flex drivers consistent with an employer-employee relationship. “Amazon designated a route that Flex drivers used to travel between specific locations and compelled Flex drivers to complete a predetermined delivery block’s territory within a certain time,” according to the opinion.

The court also took note that workers were not free to follow their own pattern of work.

In its findings, the commission said drivers had to log onto an app, request packages to deliver, go to the warehouse, wait to be released and take a photo of the packages once the packages were delivered among other requirements.

In addition, the app provided the driver with the route most likely to result in the driver finishing in the allotted timeframe. Diggs testified that while drivers could deliver packages out of sequence, it wasn’t easy. He’d heard “horror stories” of drivers who attempted to do so.

“Although Flex drivers may have, in the abstract, ignored the delivery sequence recommended by the Flex app, the commission made its determination that the factor is suggestive of an employment relationship based, in part, on how this component of the parties’ arrangement operated in practice,” according to the opinion.

Amazon has been contacted for comment on this case.