Amazon will dish out $61.7 million to its drivers for withholding their tips over a two-and-a-half-year period.
This payout settles a Federal Trade Commission investigation that kicked off after the Los Angeles Times exposed the company for dipping into customer tips to cover the base pay guaranteed to Flex drivers, who deliver Amazon Fresh, Prime Now, and other orders.
In May 2019, the FTC notified Amazon that they were being investigated for shorting their Flex drivers. The complaint claims that Amazon changed its tip-dipping practice only after learning that they were under investigation.
Up until August 2019, Amazon promised Flex drivers a guaranteed minimum base pay for each order. This was said to include 100% of customer tips. However, at times, Amazon would use tips to subsidize driver’s payments. To demonstrate this, a Flex driver assigned to deliver an order to his own home tipped himself $12. The guaranteed minimum base pay for this delivery was $27. In total, the driver only received $30 for the delivery, which the company claims included 100% of the tip. However, Amazon only contributed $18. Amazon sent an email to drivers that same month informing them that tips would no longer be used to subsidize the base pay. They also promised to provide a full breakdown of how much workers were being compensated per order.
“Today’s order provides substantial redress to the families victimized by Amazon’s anticompetitive deception,” FTC Commissioner Rohit Chopra said in a statement. “However, this cannot be the only action we take to protect workers and families from dominant middlemen. The FTC will also need to carefully examine whether tech platforms are engaging in anticompetitive conduct that hoodwinks workers and crushes law-abiding competitors.”
In addition to the multi-million dollar settlement, Amazon will be barred from changing its tip policy without drivers’ written consent. The FTC is encouraging Flex drivers to sign up to receive email notifications regarding their tip refund status.
Despite the settlement, Amazon spokesperson Deborah Bass denies any wrongdoing and claims that their drivers are paid over $25 per hour on average.
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