In Virginia, misclassified delivery drivers are winning the right to unemployment insurance (UI) by challenging Amazon’s claim that workers hired through its Flex program are independent contractors. Drivers working for Amazon Flex use their own vehicles to perform last-mile delivery, picking up packages from Amazon warehouses and delivering them to customers.
Amazon sets the terms of its relationship with Flex drivers and specifies how the work should be performed in its Independent Contractor Terms of Service, a contract each driver must sign before starting. The contract states that Amazon sets drivers’ pay, has the right to surveil drivers and collect their data, and requires drivers to follow specific delivery instructions—including making deliveries during a specified delivery window, using insulated bags for food orders, and checking customers’ ID when delivering alcohol.
Despite Amazon’s control of nearly every aspect of Flex work, Amazon classifies Flex drivers as independent contractors, not employees. This means that drivers are excluded from basic employment rights and benefits—including UI.
A former Flex driver in Virginia, Ronald Diggs, challenged this classification when he filed a claim for UI benefits in 2019. The Virginia Employment Commission (VEC) found that Diggs was misclassified as an independent contractor under Virginia’s UI law and was an employee eligible for UI benefits. The VEC also ruled that all Amazon Flex drivers in Virginia are employees for purposes of UI and ordered Amazon to begin paying into Virginia’s UI fund like all other employers are required to do. The VEC’s decision was affirmed by the Virginia Court of Appeals in 2023. The Court’s decision follows a similar decision in Wisconsin in which the Wisconsin Supreme Court held that Amazon Flex drivers are employees under Wisconsin law and eligible for UI.1
Amazon appealed the Virginia Court of Appeals’ decision to the Virginia Supreme Court. The Court agreed to hear the case and decide if all Flex drivers are eligible for UI under Virginia law. In September 2024, NELP filed an amicus brief in the case, Amazon Logistics v. Virginia Employment Commission, supporting the VEC’s decision. NELP’s amicus brief includes the following arguments:
First, through Amazon Flex’s Terms of Service, Amazon controls most aspects of its relationship with drivers through technological surveillance and algorithmic management. Amazon uses an app to match drivers to available shifts, set pay and delivery loads, and track drivers’ performance. Amazon surveils drivers in real time, monitoring drivers’ communications with customers on the app, their driving acceleration and braking, and even how much they touch their screens while in motion. Amazon uses this information to enact discipline and rewards. As one driver explained, “the app is our supervisor and boss.”2 Amazon’s pervasive control over drivers’ working conditions means that, unlike legitimate independent contractors, Flex drivers are not truly in business for themselves.
Second, Amazon Flex drivers are the types of workers who most need and benefit from the stabilizing impact of UI. Amazon says it pays Flex drivers in Virginia approximately $20 per hour. This hourly wage does not account for the drivers’ work expenses, including gas, vehicle wear-and-tear, and the employer portion of the Social Security tax. Drivers’ real earnings are substantially less than $20 per hour and likely below Virginia’s $12 minimum wage. As so-called “independent contractors,” Flex drivers are not only excluded from UI, but from other employment-based benefits—including paid sick and family leave, workers’ compensation, employer-provided health insurance, and retirement benefits—compounding their financial insecurity.
These exploitative working conditions are not unique to Amazon Flex. Poverty-level wages and nonexistent benefits are pervasive in app-based work—work obtained through an app, such as those run by Uber, Lyft, and DoorDash, where workers are misclassified as independent contractors. According to one national study from 2020, one in seven app-based workers earned less than the $7.25 federal minimum wage, and more than a quarter earned less than their state’s minimum wage.3
These practices exacerbate racial inequities, because people of color are more likely than white people to do app-based work.4 App-based companies are creating a racialized sub-class of workers who are predominantly people of color and are denied baseline employment rights and benefits.5
By ensuring Amazon Flex drivers have access to UI, Virginia is fighting back against the misclassification schemes used by app-based companies that degrade wages and working conditions and exacerbate racial inequities.
Third, Amazon’s misclassification scheme not only harms workers but also harms competing businesses and the solvency of Virginia’s UI fund. Employers who misclassify their workers illegally pocket between 20 to 40 percent of payroll costs, making it more difficult for law-abiding businesses to compete. And state governments lose out on billions of dollars in payroll taxes and UI contributions, harming the solvency of UI funds and weakening states’ resiliency during recessions.
Corporations like Amazon want control without responsibility. They want to dictate working conditions without being responsible for complying with labor standards and contributing to social insurance funds. NELP applauds Virginia and Wisconsin for listening to workers’ demands and holding Amazon accountable. Universal access to UI is an important component in our fight for a good-jobs economy—an economy where every job is a good job, everyone who wants a job can get one, and everyone has economic security between jobs. We urge other states to follow Virginia and Wisconsin’s lead.
Footnotes
2. Aiha Nguyen & Eve Zelickson, At the Digital Doorstep, Data & Society, Oct. 12, 2020, at 9.
3. https://www.epi.org/publication/gig-worker-survey/.
4. Bureau of Labor Statistics, U.S. Department of Labor, “Electronically mediated work: new questions in the Contingent Worker Supplement,” Monthly Labor Review, Sep 2018.
5. See Veena Dubal, The New Racial Wage Code, https://journals.law.harvard.edu/lpr/wp-content/uploads/sites/89/2022/05/3-Dubal.pdf.
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About the Author
Laura Padin
Areas of expertise:
- Enforcement of Workplace Standards,
- Nonstandard Workforce
