Wisconsin Supreme Court lets ruling stand that declared Amazon drivers to be employees

 The Wisconsin Supreme Court on Tuesday let stand a lower court ruling that declared some delivery drivers for Amazon were employees as the state argued, not independent contractors as the online retail giant contended.

The court, in a unanimous decision, said the appeal was “improvidently granted,” meaning the Supreme Court should not have reviewed the case. That decision dismissing the case, issued after the court heard oral arguments, leaves a 2023 Wisconsin appeals court ruling against Amazon in place.

That ruling found that drivers in the Amazon Flex program are a part of the state’s unemployment insurance system and entitled to jobless pay if they are laid off. The decision means an Amazon subsidiary, Amazon Logistics, will likely be hit with a tax bill of more than $200,000.

Justice Ann Walsh Bradley, in a concurring decision, said the reason the court dismissed the case was that further review “would not serve any meaningful purpose” or any “further development of the law.” Justice Rebecca Bradley, in a separate writing, faulted Bradley for trying to explain the court’s decision, saying it “will only sow additional confusion.”

The case was closely watched for what effect a ruling would have on workers in the “gig economy.”

Labor unions, along with the state Department of Workforce Development, pushed for the Wisconsin Supreme Court to recognize the Amazon Flex workers as employees.

Attorneys for Wisconsin and Amazon did not immediately return messages Tuesday.

Courts across the country have been grappling with similar questions as states struggle with how to treat workers who are hired for a particular job, often at the push of a button through a smartphone app, to deliver food, groceries, packages or perform a variety of tasks.

“The gig economy is clogging up the court with all of this stuff, all the time,” said Samantha Prince, assistant professor of law at Penn State Dickinson College of Law and an expert on worker misclassification and the gig economy. “It’s just nuts. We really need this stuff to be resolved and stay resolved and stop with all the uncertainty for everybody.”

Prince said even though the court declined to issue a ruling in this case, allowing the appeals court ruling to stand that found the Amazon Flex drivers were employees is “one of the many dominoes that are starting to fall.”

“And even though this case only applies to Amazon Flex drivers, it will likely resonate through the other gig company court cases,” she said. “The more cases that find that gig company drivers are employees, the more companies are going to have to pay their rightful share.”

Every state has its own laws determining whether workers are employees or independent contractors, Prince said. Those laws set the rules for what wages and overtime the workers must be paid and, in this case, whether they are subject to unemployment benefits that the employer must contribute toward.

Employees who got approved for the Amazon Flex program could download an app for their personal phones showing blocks when they could deliver packages for the company. Workers would scan packages at the Amazon warehouse in Milwaukee and use their personal vehicles to deliver them, using a route suggested by Amazon.

After one Amazon Flex worker was fired, he filed for unemployment insurance. The Department of Workforce Development conducted an audit of more than 1,000 Amazon Logistics drivers between 2016 and 2018 and concluded the vast majority of drivers were employees, not independent contractors, and therefore eligible for unemployment insurance payments. The state told Amazon in 2018 that it owed more than $205,000 in unemployment insurance premiums.

The Wisconsin Labor and Industry Review Commission upheld the state DWD determination that the drivers were employees. Amazon Logistics sued and a Waukesha County circuit court judge ruled the drivers were independent contractors. Last year, the Wisconsin Court of Appeals overturned that ruling, agreeing with the state that the drivers were employees. That set up the appeal to the Wisconsin Supreme Court.

Many other states have looked at the issue.

A Virginia appeals court ruled in 2023 that Amazon Flex drivers were employees, not independent contractors, and ordered Amazon to pay unemployment insurance taxes and penalties.

A California state appeals court last year said app-based ride-hailing and delivery companies like Uber and Lyft can continue to treat their California drivers as independent contractors, allowing them to bypass other state laws requiring worker protections and benefits.

The U.S. Department of Labor enacted a new rule on March 11 that aims to prevent the misclassification of workers as “independent contractors,” a step that could bolster both legal protections and compensation for millions in the U.S. workforce. That rule applies to wages and overtime, but not unemployment compensation.

Orders for long-lasting U.S. manufactured goods increased more than expected in February, while business spending on equipment showed tentative signs of recovery, boosting the economy's prospects in the first quarter.

The rebound in orders reported by the Commerce Department on Tuesday, which was driven by increases in transportation equipment, primary metals and machinery, suggested manufacturing could be regaining its footing after struggling in the aftermath of the Federal Reserve's hefty interest rate hikes.

"The data suggest that business equipment investment is beginning to recover, and with corporate bond yields likely to fall a little further over the coming months while manufacturing activity appears to be picking up again, we suspect that recovery has further to run," said Andrew Hunter, deputy chief U.S. economist at Capital Economics.

Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rose 1.4% last month, the Commerce Department's Census Bureau said. Data for January was revised lower to show orders falling 6.9% instead of 6.2% as previously reported. Economists polled by Reuters had forecast durable goods orders would rise 1.1%.

Orders advanced 1.8% on a year-on-year basis in February. The outlook for manufacturing, which accounts for 10.3% of the economy, is steadily improving amid expectations that the U.S. central bank will start cutting rates this year.

A survey from the Institute for Supply Management this month showed manufacturers were fairly upbeat in March about sales and business conditions. Factory output rebounded in February.

The Fed has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range since March 2022.

But the sector is not out of the woods yet.

AIRCRAFT ORDERS RISE

Civilian aircraft orders increased 24.6% last month after plummeting 63.5% in January.

Boeing (BA.N), opens new tab reported on its website that it had received 15 orders for commercial aircraft. While that was an improvement from the three orders booked in January, it marked a continued sharp slowdown from the end of 2023.

The planemaker is under pressure after a cabin panel blew out in mid-air on an Alaska Airlines jet in early January, with the Federal Aviation Administration barring Boeing from expanding production of its best-selling 737 MAX narrow-body planes to improve quality control.

Boeing announced on Monday that CEO Dave Calhoun would step down by the end of 2024 as part of a broad management shakeup.

Overall transportation orders climbed 3.3% in February after dropping 18.3% in January. Orders for motor vehicles and parts accelerated by 1.8%. Orders of primary metals rebounded 1.4% and those of fabricated metals rose 0.8%. Machinery orders increased 1.9%.

But orders for computers and electronic products fell by 1.4%, while those for electrical equipment, appliances, and components decreased by 1.5%.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% in February after falling 0.4% in the prior month.

These so-called core capital goods orders were previously reported to have been unchanged in January. Core capital goods shipments fell 0.4% after rising 0.8% in January.

Non-defense capital goods orders advanced 4.4%, while shipments in that category rose 2.7% after declining 3.0% in January. Shipments of these goods go into the calculation of the business spending on equipment components in the gross domestic product report.

Business spending on equipment contracted in the fourth quarter. It has declined in four of the last five quarters.

U.S. consumer confidence was little changed in March as fading fears of a recession took a backseat to growing concerns about the nation's political environment ahead of November's presidential election, a survey showed on Tuesday.

The Conference Board said that its consumer confidence index dipped to 104.7 this month, essentially unchanged from a downwardly revised 104.8 in February.

Economists polled by Reuters had forecast the index nudging up to 107.0 from the previously reported 106.7.

"Recession fears continued to trend downward," said Dana Peterson, chief economist at the Conference Board in Washington. "Meanwhile, consumers expressed more concern about the US political environment compared to prior months."

Consumers' inflation expectations ticked up to 5.3% from 5.2% in February.

Trump Media & Technology Group shares surged more than 4% on Tuesday in their debut on the Nasdaq which comes more than two years since its merger with a blank-check firm was announced.

At $70.46, the company's market capitalization was $9.55 billion on an undiluted basis. Trading in the shares under the new ticker "DJT" was briefly halted just after the opening bell due to volatility.

Donald Trump's majority stake in TMTG was last valued at $5.55 billion although lock-up restrictions for six months could prevent him from selling or borrowing against his shareholding.

"The valuation of the business is rich relative to its underlying fundamentals, but I would not get in front of it in the near term," said Thomas Hayes, Chairman of Great Hill Capital.

"This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects."

TMTG was the second biggest percentage gainer across U.S. exchanges at 10.20 a.m. ET, according to LSEG data. Retail trader-focused social media and trading platform Stocktwits listed it as the most trending stock.

Shares of blank-check firm Digital World Acquisition Corp, which is now TMTG, surged more than 35% on Monday after completing its merger.

TRUMP'S FINANCIAL WOES

Trump, who is facing four criminal trials in his race for the U.S. presidency, has been struggling to raise money for his campaign and legal expenses.

Meanwhile, a pause to a ruling that would have blocked New York state authorities from seizing his assets bought Trump some financial breathing room as he tries to build a campaign war chest and keep his real-estate empire intact.

The deal will inject $300 million cash into Truth Social, which had lost $10.6 million from its operations in the first nine months of 2023.

The company also provides a way for supporters of Trump to bet on his resurgence as a political figure, as evidenced by shares of shell company Digital World Acquisition nearly tripling in value this year.

A Reddit user Chester-Ming posted "the (Trump) hype has the potential to offset everything - shitty fundamentals, insane dilution, and more", on a 15 million-large "wallstreetbets" investor forum, although the user warned, opens new tab that Trump could potentially cut his stake.

Digital World said in a filing last month that Trump may divest his stake in Truth Social and cease any involvement in its management based on how his bid for president goes.

The special purpose acquisition firm signed its merger agreement with Trump's company in October 2021 and since then has been the target of investigations by the U.S. Department of Justice.

It reached an $18 million settlement with the U.S. securities regulator over inaccurate disclosures in July last year.

Shareholders voted in favor of the deal last week, more than a month after the regulator gave the green light for the deal.

Shares of Krispy Kreme Inc. rocketed Tuesday after the doughnut seller announced an expanded partnership with McDonald’s Corp., in which its doughnuts will start becoming available at the fast-food giant’s restaurants across the U.S.

The rollout of the partnership will begin in the second half of 2024, with Krispy Kreme doughnuts expected to be available nationwide by the end of 2026.