TOPLINE

 

Amazon will pay more than $61.7 million to settle charges that the e-commerce giant withheld tips from delivery drivers for more than two years, the Federal Trade Commission announced Tuesday.

KEY FACTS

According to the FTC, the $61.7 million figure represents the full amount Amazon allegedly kept from Amazon Flex drivers, and will go toward compensating the drivers.

The FTC filed a complaint against Amazon that claimed the company advertised drivers working in the Flex program could earn between $18 and $25 per hour and would keep all tips from customers. 

According to the FTC, the $61.7 million figure represents the full amount Amazon allegedly kept from Amazon Flex drivers, and will go toward compensating the drivers.

The FTC filed a complaint against Amazon that claimed the company advertised drivers working in the Flex program could earn between $18 and $25 per hour and would keep all tips from customers. 

Instead, the FTC alleges Amazon kept that money to help subsidize paying their drivers a lower hourly rate.

According to the FTC, Amazon decreased hourly pay for Flex drivers without informing them, and used tips from customers to make up the difference between the rate they promised to drivers and the new, lower hourly rate.

Hundreds of drivers complained about the change, and accused Amazon of intentionally obscuring the change in pay.

Amazon only switched back to the previous pay model after the FTC launched an investigation into the matter in August 2019, the FTC claims.

KEY BACKGROUND

Amazon Flex was introduced in 2015 as a delivery service that allowed drivers to deliver goods using their own vehicle. Drivers are classified as independent contractors by Amazon and deliver packages in dozens of U.S. cities. Amazon is the latest in a string of tech companies to come under fire for their employment practices. DoorDash paid $2.5 million to settle a lawsuit from the Washington D.C. Attorney General in November, and Instacart has been scrutinized by lawmakers for its tip distribution practices.