Wisconsin Court of Appeals Discusses Independent Contractor Test
A recent decision from the Wisconsin Court of Appeals clarifies who qualifies as an “employee” for purposes of employers paying unemployment taxes and employees receiving unemployment insurance benefits. In Amazon Logistics, Inc. v. LIRC, the court of appeals held that Amazon did not meet its burden of proving that its “delivery partners” qualified as independent contractors. They were thus determined to be employees for the purposes of unemployment insurance benefits. Amazon was also assessed a significant unemployment tax bill of over $200,000, including penalties and interest.
In Wisconsin, individuals who are paid for performing work are presumed to be employees for unemployment compensation purposes. Employers can then rebut that presumption by showing that an individual satisfied a two-part test, each part containing a variety of factors, in order to classify the individual as an independent contractor. The second part of the test requires the employer to meet 6 factors in a 9-factor test. Those factors include, among other things, looking at whether the individual holds themselves out publicly as being in an independent business, operates under multiple contracts, furnishes their own equipment, and incurs the main expenses associated with the work being performed.
The court of appeals held that Amazon was only able to show 5 of the 9 factors and thus failed to meet its burden. Among other factors, Amazon could not prove that the delivery partners held themselves out publicly as being in the delivery business, nor could it demonstrate that the delivery partners operated under multiple contracts. This case is a good reminder that employers must conduct a fact-intensive inquiry into whether an individual performing services for an employer truly qualifies as an independent contractor for unemployment compensation purposes.
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