Va. appeals court upholds finding that Amazon Flex drivers were misclassified as contractors

The Virginia Court of Appeals on Tuesday upheld a 2020 decision by the Virginia Employment Commission that Amazon’s logistics arm had misclassified delivery drivers who work under its Uber-like Flex system as independent contractors. 

The ruling stems from a case that began in 2019 when former Flex driver Ronald Diggs filed an unemployment claim with the VEC. The commission subsequently found the work Diggs and other Flex drivers had performed for Amazon as independent contractors should be classified as employment, and ordered the company to pay unemployment insurance taxes for all other drivers who were “misclassified as independent contractors.” 

On Sept. 26, a three-judge panel of the state appeals court found that “the evidence supports the Commission’s determination that Diggs was an Amazon employee” and that it was reasonable for the commission to extend that conclusion to all other Flex drivers. 

Under Amazon’s Flex driver program, independent drivers compete for available delivery routes through an app and then are responsible for collecting and dropping off all of the packages on that route. 

“It’s simple: You use your own vehicle to deliver packages for Amazon as a way of earning extra money to move you closer to your goals,” the company says on its Flex website. 

Amazon considers Flex drivers self-employed independent contractors. Among other arguments in an appeal of VEC’s decision in Richmond City Circuit Court, the company contended Flex drivers “are free to conduct the manner and means of the delivery services without instruction from Amazon” and “have no set hours of work, do not work full time, do not make any regular oral or written reports to Amazon, are free to choose their own routes to deliver packages, and are paid ‘by the job,’ not hourly, weekly, or monthly.” 

The Virginia Employment Commission, however, disputed that classification. State law directs the commission to rely on 20 factors outlined by the Internal Revenue Service in determining whether a worker is an independent contractor or an employee for tax purposes.

Those 20 factors include the employer’s provision of training to the worker, a continuing relationship between the worker and employer, set hours of work, the requirement that a worker be full time or work on the employer’s premises, the employer’s furnishing of a worker with tools and materials, the employer’s ability to order that a worker do a job in a particular sequence, and the ability of a worker to work for more than one firm at a time.

“Generally the relationship of employer and employee exists when the person or persons for whom the services are performed have the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished,” the commission quoted the IRS in support of its determination. “That is, an employee is subject to the will and control of the employer not only as to what shall be done but as to how it shall be done.” 

The Virginia Employment Commission argued that many of the 20 factors showed that Amazon exerted a level of control over Diggs — and, by extension, other Flex drivers — that was more in line with a relationship between an employer and employee rather than an employer and an independent contractor. 

For instance, Flex drivers were given specific instructions “about when, where, and how they are to work,” including where they had to place packages, were required to undergo training in the form of mandatory video tutorials, were compelled to follow a particular sequence of services, were required to contact the company about any problems they encountered and were subject to regular reporting through the driver app. 

VEC also concluded that even though drivers were paid by delivery block, or route, “all delivery blocks reflected a $20.00 per hour rate,” meaning they received “in effect, an hourly rate of pay.” 

Amazon appealed that conclusion in both Richmond Circuit Court and the Virginia Court of Appeals. 

“Whether, when, and how frequently to provide delivery services to Amazon customers are … entirely within delivery partners’ discretion,” the company wrote in filings with the Richmond Circuit Court. “When making deliveries, delivery partners control all aspects of the delivery service, including how to load packages, how to sequence deliveries, and how to complete deliveries.” 

Amazon also pointed in its defense to the independent contractor agreement it enters with Flex drivers, which it said “confirms the independent-contractor relationship between each Delivery Partner and Amazon and expressly disclaims the existence of any employment relationship.” 

In later proceedings, Virginia’s appeals court rejected that argument. 

“Contrary to Amazon’s contentions, the commission’s determination that ‘Amazon required Flex drivers to comply with specific instructions on when, where and how delivery blocks were to be completed’ is supported by the record,” the judges wrote. “That the text of the agreement purports to give Flex drivers control over the ‘means and manner’ for providing services does not negate the commission’s determination.” 

Attorney General Jason Miyares, whose office represented the VEC, told the Mercury he was “pleased with today’s decision from the Court of Appeals and I am proud of my office’s efforts to ensure that these workers are treated fairly and given the benefits they rightly deserve. “

A request for comment from Amazon’s lead attorney in the appeal did not receive a response.