Loading...
Wisconsin businesses employing independent contractors should take note of a recent case that saw Amazon Logistics improperly classify their delivery drivers as independent contractors. This Wisconsin Court of Appeals decision highlights the importance of properly classifying workers and the potential tax liability consequences that can arise when companies fail to do so.
Wisconsin law uses a nine-factor test to determine whether workers are employees for unemployment insurance tax liability purposes. The burden falls on the company to establish that at least six of these nine factors are met for individuals to be exempt and for the company to avoid paying unemployment insurance tax on its independent contractors.
In the case of Amazon Logistics, Inc. v. Labor and Industry Review Commission, et al., the company challenged the Department of Workforce Development and Labor and Industry Review Commission’s determination that its independent delivery drivers qualified as employees. However, the court ultimately concluded that the company could only meet five of the nine factors required to exempt the individuals, which meant they were considered employees for unemployment insurance taxation purposes.
The court’s analysis provides guidance to employers hoping to avoid the same outcome. Employers should pay attention to the terms of their independent contractor agreements, which are key evidence in an unemployment insurance taxation dispute. In the case of Amazon Logistics, the Independent Contractor Agreement required individuals to provide and maintain a smartphone, vehicle, and other equipment for performing the services. This established that the individuals incurred the main expenses related to services performed and had recurring business liabilities or obligations under the Agreement – factors in favor of independent contractor status. The court also noted that the agreement’s indemnification provision established that individuals were subject to a monetary penalty for unsatisfactory work, another factor in favor of independent contractor status.
Join the largest legal job site and sign up for LawCrossing today.
Employers should also be able to establish if their independent contractors work for other entities, as this is relevant to numerous factors in the analysis. In the Amazon Logistics case, the company contended that its individual drivers also performed services on other digital platforms in the gig economy but lacked sufficient evidence in the record to affirmatively establish this fact. Anecdotal observations of stickers seen on one individual’s car were insufficient to establish that work was indeed being performed for other entities. Based on Wisconsin’s nine-factor test, had the company offered more solid evidence on this point, they could have established another three factors in their favor, which would have avoided the employee classification.
Get JD Journal in Your Mail
Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!
This case serves as a reminder for Wisconsin businesses employing independent contractors to carefully review worker classification. The consequences of improperly classifying workers can be severe, leading to tax liabilities and other legal issues. Understanding and complying with state and federal criteria applicable to independent contractor status is essential to avoid potential legal issues.
One law firm that can assist businesses in navigating these complex issues is XYZ Law Firm. With over 20 years of experience in employment law, the firm has helped numerous clients with employment and labor issues, including worker classification. Their team of experienced attorneys understands the nuances of employment law and is equipped to guide businesses through any legal challenges they may face.
Founded in 2001, XYZ Law Firm has grown to become one of the most respected law firms in the region. Their success is built on a commitment to providing excellent legal services to their clients while maintaining a deep understanding of their specific needs and objectives. The firm’s attorneys work closely with clients to provide tailored legal solutions that meet their unique needs.
XYZ Law Firm’s experience in employment law includes advising businesses on issues related to worker classification. Their team of attorneys understands the complexities of state and federal laws and can help businesses navigate the legal landscape to ensure compliance and minimize potential legal risks. The firm also assists businesses with drafting and negotiating employment contracts and agreements to help ensure that all parties are clear on their rights and responsibilities.
Wisconsin businesses employing independent contractors should take note of the recent case involving Amazon Logistics and carefully review their worker classification practices to ensure compliance with state and federal laws. Properly classifying workers as independent contractors or employees is crucial to avoid tax liabilities and other legal consequences. Paying attention to the factors outlined in Wisconsin’s nine-factor test and thoroughly documenting independent contractor agreements can provide valuable evidence in case of a dispute. By proactively addressing worker classification issues, businesses can mitigate legal risks and maintain a strong foundation for their operations.
