Amazon agrees to $62M settlement
Payout will benefit Flex delivery drivers
Amazon will pay nearly $62 million to workers cheated out of their tips as Amazon Flex drivers, according to a settlement with the Federal Trade Commission announced Tuesday.
The payout will fully compensate drivers for their losses during a 2½ year period starting in late 2016 until 2019, the FTC said. Amazon only stopped its behavior after learning of the FTC’s investigation, the agency said.
“With the gig economy continuing to grow, this is an important step ... in treating workers honestly and fairly,” acting FTC Chairwoman Rebecca Kelly Slaughter said in a conference call with reporters.
In addition to ordering payments to drivers, the settlement prohibits the Seattle-based online retailer from misrepresenting
compensation in the future, she said.
Amazon Flex drivers — classified by Amazon as independent contractors — deliver goods and groceries ordered through Amazon’s Prime Now and AmazonFresh programs, which both
allow tips.
The FTC alleges that in late 2016, Amazon shifted from paying drivers the promised rate of $18-$25 per hour plus full customer tips, to paying drivers a
lower hourly rate — a change that was not disclosed to drivers.
Amazon then used tips to make up the difference between the new lower hourly rate and the promised rate. As a result, drivers were shorted some $61.7 million in tips, the FTC said.
The company took steps to conceal the changes as it received hundreds of complaints from drivers who became suspicious when their overall earnings fell, the FTC said.
FTC Commissioner Noah Joshua Phillips called the company’s conduct “outrageous.”
Amazon was “syphoning earnings from drivers and making misrepresentations to drivers and consumers who wanted to tip drivers,” he told reporters.
“This is a very good outcome. Every penny taken from drivers is coming back.”
Going forward, Amazon is prohibited from making any changes to how driver tips are used as compensation without obtaining the driver’s express informed consent.
“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,” an Amazon spokeswoman wrote in an email Tuesday.
“Amazon Flex delivery partners play an important role in serving customers every day, which is why they earn among the best in the industry at over $25 per hour on average.”
Although workers are to be compensated, the FTC has asked Congress to expand the agency’s powers so it can seek fines for first offenses. Amazon is subject to fines, but only if it violates the current settlement.
“I would like a one-two punch,” Ms. Slaughter said. “Get money back for people harmed and I want a stick in the form of penalties” to act as a better deterrent.
Flex drivers who believe they are part of the settlement are being encouraged to sign up for email updates on the status of their refunds.
The agreement with Amazon is subject to public comment for 30 days, after which the FTC will decide whether to make it final.
Allegations of pocketing tips also have surfaced against Doordash and other delivery companies.
Ms. Slaughter said the agency could not confirm, deny or comment on current investigations or potential probes.