Amazon’s alleged failure to pay its delivery workers their full tips is the driving force behind a recently settled lawsuit.
The conglomerate reached a settlement with the Federal Trade Commission entailing the transfer of over $61.7 million, according to a readout released by the agency on Tuesday.
The settlement marked the resolution of a years-old FTC allegation that the corporation didn’t pay its Amazon Flex drivers the “full amount [in tip money] that Amazon allegedly withheld from drivers” from late 2016 to August 2019.
“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”
In the initial complaint, the government agency alleged that Amazon duped the independent contractors participating in its ride-share delivery service. In 2016, Amazon changed its policy, promising to pay rates of $18-25 per hour plus additional full tip amounts to lowering the hourly rate without notifying drivers, the FTC said.
“Amazon used the customer tips to make up the difference between the new lower hourly rate and the promised rate. This resulted in drivers’ being shorted more than $61.7 million in tips,” the readout said.
Amazon “stopped its behavior only after becoming aware of the FTC’s investigation in 2019,” the agency added. Following the company’s notification from the FTC about mishandling its own policies, Amazon reverted to a model where drivers get an “identified” base pay “plus 100% of 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,” a spokesperson for Amazon said in a company statement, CNET reported.
The Seattle-based corporation touted its Amazon Flex program, claiming that it offers the best hourly rate to independent contractors in the business.
“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,” the spokesperson added.
The FTC will begin distributing the funds to compensate the Amazon Flex drivers, it said. Those affected can sign up for agency updates regarding the case.
The Washington Examiner reached out to Amazon for comment but did not immediately receive a response.
