Va. Top Court Scolds Amazon for ‘Zigging’ before ‘Zagging’ on Flex Drivers’ Employment Status

Case File

Amazon claimed that it used independent contractors in its Flex drivers program and lost that argument. Then it tried to say that not all of the drivers in the program should be treated the same under the law. The Virginia Supreme Court didn't buy Amazon's "approbating" and "reprobating." Simply Research subscribers have access to the full text of the decision.

Case

Amazon Logistics, Inc., v. Virginia Employment Commission, No. 230865 (Va. 03/06/25).

What Happened

Amazon claimed that delivery drivers in its "Flex program" were independent contractors for unemployment compensation purposes. In a case before the Virginia Employment Commission, the commission disagreed and found that they were employees.

Amazon appealed, losing in court and then losing again in the appellate court before appealing to the Virginia Supreme Court, arguing that the decision of the appellate court should not apply to Flex drivers who enrolled in the program after July 1, 2020, due to a change in the law.

Rule of Law

In law applicable at the time the events in the case happened, the term "employment" for tax liability purposes was defined under Virginia law following IRS standards to determine whether an individual's services for a business qualified as employment, following 20 factors to determine whether a putative employer exercised sufficient control over the individual for the individual to be classified as an employee.

Workers' Comp 101: Per Internal Revenue Service Revenue Ruling 87-41 and as explained by Virginia, the 20 factors for determining employment were:

Instructions. An employee must comply with instructions about when, where and how to work. The control factor is present if the employer has the right to require compliance with the instructions.

Training. An employee receives on-going training from, or at the direction of, the employer. Independent contractors use their own methods and receive no training from the purchasers of their services.

Integration. An employee’s services are integrated into the business operations because the services are important to the business. This shows that the worker is subject to direction and control of the employer.

Services rendered personally. If the services must be rendered personally, presumably the employer is interested in the methods used to accomplish the work as well as the end results. An employee often does not have the ability to assign their work to other employees, an independent contractor may assign the work to others. 

Hiring, supervising and paying assistants. If an employer hires, supervises and pays assistants, the worker is generally categorized as an employee. An independent contractor hires, supervises and pays assistants under a contract that requires him or her to provide materials and labor and to be responsible only for the result.

Continuing relationship. A continuing relationship between the worker and the employer indicates that an employer-employee relationship exists. The IRS has found that a continuing relationship may exist where work is performed at frequently recurring intervals, even if the intervals are irregular.

Set hours of work. A worker who has set hours of work established by an employer is generally an employee. An independent contractor sets his/her own schedule.

Full time required. An employee normally works full time for an employer. An independent contractor is free to work when and for whom he or she chooses.

Work done on premises. Work performed on the premises of the employer for whom the services are performed suggests employer control, and therefore, the worker may be an employee. Independent Contractor may perform the work wherever they desire as long as the contract requirements are performed. 

Order or sequence set. A worker who must perform services in the order or sequence set by an employer is generally an employee.  Independent Contractor performs the work in whatever order or sequence they may desire.

Oral or written reports. A requirement that the worker submit regular or written reports to the employer indicates a degree of control by the employer.

Payments by hour, week or month. Payments by the hour, week or month generally point to an employer-employee relationship.

Payment of expenses. If the employer ordinarily pays the worker’s business and/or travel expenses, the worker is ordinarily an employee.

Furnishing of tools and materials. If the employer furnishes significant tools, materials and other equipment by an employer, the worker is generally an employee.

Significant investment. If a worker has a significant investment in the facilities where the worker performs services, the worker may be an independent contractor.

Profit or loss. If the worker can make a profit or suffer a loss, the worker may be an independent contractor.  Employees are typically paid for their time and labor and have no liability for business expenses.

Working for more than one firm at a time. If a worker performs services for a multiple of unrelated firms at the same time, the worker may be an independent contractor.

Making services available to the general public. If a worker makes his or her services available to the general public on a regular and consistent basis, the worker may be an independent contractor.

Right to discharge. The employer’s right to discharge a worker is a factor indicating that the worker is an employee.

Right to terminate. If the worker can quit work at any time without incurring liability, the worker is generally an employee.

Since July 1, 2020, the IRS has used a new "test" that divides the 20 factors into three categories:

(1) Behavioral control.

(2) Financial control.

(3) The type of relationship of the parties.

What the Virginia Supreme Court Said

The Virginia Supreme Court held that Amazon waived its arguments on appeal because it "approbated and reprobated" in its position.

The court explained that a litigant cannot "'approbate and reprobate by taking successive positions in the course of litigation that are either inconsistent with each other or mutually contradictory,' or else such arguments are waived."

Essentially, the court ruled that Amazon could not legally flip flop after losing its case before the commission.

"Amazon ... affirmatively sought a class-wide ruling from the Commission -- that it should find all Flex drivers are independent contractors -- and argued that the evidence would support such a ruling. "After losing before the Commission, Amazon tried to retroactively pivot away from its strategy."

The Virginia Supreme Court affirmed the appellate court's judgment.

Takeaway

Amazon attempted to win this appeal by arguing against its original legal strategy, while claiming the Virginia Supreme Court should overlook its contradictions. As the court wrote, "Put more colloquially, Amazon" "zigged" after "it previously zagged."

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