Amazon kept $61.7M of Flex drivers’ tips

U.S. agency called firm’s conduct ‘outrageous,’ will pay back shorted workers

Amazon.com Inc. will pay $61.7 million (U.S.) to settle a U.S. Federal Trade Commission finding that the company withheld tips meant for Flex delivery drivers for more than two years.

Despite pledging to drivers and shoppers that Flex drivers would receive 100 per cent of the value of tips, the world’s largest online retailer used a portion of the gratuities to pay the basic hourly rate for the ondemand package delivery program, the regulator said on Tuesday.

“The conduct alleged in the complaint is outrageous,” FTC acting chair Rebecca Kelly Slaughter and commissioner Noah Phillips said in a statement. Platform companies that operate in the gig economy, they said, “must treat their workers fairly and nondeceptively.”

Flex, launched in 2015, invites independent contractors to deliver packages from their own vehicles. Amazon promised drivers a pay rate of $18 to $25 an hour and the full value of their tips.

But in late 2016, without disclosing the change to drivers or shoppers, the company started paying drivers a lower rate and using the tips to make up the difference. After drivers began wondering why their overall pay had decreased, hundreds complained to the company, according to the FTC.

Amazon diverted almost a third of customer tips to driver wages, stopping the practice only after becoming aware of the FTC probe in August 2019, the agency said. The FTC will use the $61.7 million to compensate drivers who lost tips.

“While we disagree that the historical way we reported pay to drivers was unclear, we added additional clarity in 2019 and are pleased to put this matter behind us,” Amazon spokesperson Rena Lunak said in an emailed statement.

Amazon will be prohibited from misrepresenting to drivers details about their pay rate and tips.