Amazon is finding itself in court, again, for alleged labor violations. Three people who worked as drives through the Amazon Flex program have filed suit in Seattle, claiming that they are not contractors but employees and are owed back benefits, overtime pay, and money for gas and vehicle maintenance, according to the Wall Street Journal.

The question of contractor vs. employee has been a hot one in the new gig economy. Uber and FedEx have both been hit by lawsuits. (FedEx settled, and Uber attempted to, but a judge rejected the proposed settlement.)

Naturally, drivers want to get everything that they are legally entitled to, and companies want to get work done for the least amount of money necessary. The question is, what does the law allow and is the behavior moral? (Keep in mind, just because something is legal it doesn't make it moral.)

The Law Regarding Contractors vs. Employees

The Department of Labor has a Six Point Test to determine if someone is legally a contractor or an employee. These are:

  1. The extent to which the work performed is an integral part of the employer's business.
  2. Whether the worker's managerial skills affect his or her opportunity for profit and loss.
  3. The relative investments in facilities and equipment by the worker and the employer.
  4. The worker's skill and initiative.
  5. The permanency of the worker's relationship with the employer.
  6. The nature and degree of control by the employer.

Because following government rules is never easy, the IRS also has standards for independent contractors that don't mesh completely with the DOL's standards. These are:

  1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
  2. Financial: Are the business aspects of the worker's job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Under these two sets of rules, it's difficult to determine if Amazon complied with the law in declaring their Amazon Flex drivers contractors. The fact that drivers signed up for shifts rather than being assigned shifts, and could control their own hours, and had no expectation of permanency, benefits or other things due to an employee, is all on their side. However, Uber had a very similar situation and they agreed to settle, even if it was thrown out. (And as a side note, you should never assume that by settling a company has determined they are at fault. Lawsuits are terribly expensive and often unpredictable, and sometimes it makes financial sense to settle even if you are right.

Is it Moral?

People like to portray Amazon and other gig economy job providers as horrible people who are out to abuse the poor, however, you need to take into consideration whether or not the people are better or worse off before these gig jobs came into being.

The companies that offer these gig jobs claim that their drivers are very happy with the jobs. The fact that so many people sign up for these jobs indicate that the companies are probably correct. Would you sign up for a job that makes you worse off than you were before?

Being involved in a gig job gives you the freedom you don't have in a standard 9-5 job, which is a bonus for many people.

Should Amazon Fight?

From a law standpoint, it would be great for all involved in the gig economy if Amazon lets this go to the courts. Amazon has the money to fight a lawsuit and they followed through a security lawsuit that ended up in the supreme court, which they won. Because the law is unclear and the DOL and the IRS conflict on what makes a contractor and what makes an employee, it would be nice to have some clarification from the high court.