Amazon will pay a fine of $ 61.7 million to settle allegations that the company had not properly paid tips to its Flex deliverers, the Federal Trade Commission (FTC) announced Tuesday. The fine is the result of a payment change that the company made at the end of 2016. At the time, Amazon said Flex drivers, who use their own cars to deliver packages and groceries for Prime Now and Whole Foods, could earn $ 18 to $ 25 an hour, plus tips. for their work. That same year, it introduced a new payment policy, which the FTC says Amazon did not properly disclose to drivers, causing Flex drivers to pay a lower hourly rate. Over the span of two and a half years, it used the tips it earned to make up for the difference between the rate it promised and the rate it actually paid.
According to the agency, Amazon not only “intentionally” failed to notify drivers of its policy changes, but has also actively taken steps to cover them up and used the tips it earned. All the time it continued to advertise, Flex drivers could earn tips and earn $ 18 to $ 25 an hour. It wasn’t until it became aware of the FTC’s investigation in 2019 that the company reverted to its previous payment model.
“While we disagree that the historical way in which we reported payment to drivers was unclear, we added additional clarity in 2019 and we are pleased to move away from this issue,” said an Amazon spokesperson . CNBC.
Amazon will pay the $ 61.7 million fine to the FTC, which will use the money to compensate drivers. The agency says the fine represents the full amount of money that drivers will short-circuit between 2016 and 2019. As part of the settlement, the FTC also prohibits Amazon from misrepresenting how it will reimburse drivers in the future. The company also cannot change the way tips play a role in someone’s compensation without first obtaining their consent.
This isn’t the first time a tech company has been in the news for mishandling tips. In 2019, it was revealed that DoorDash had sometimes lowered its payout to deliverers when a customer tipped. Following public response, DoorDash has changed its earnings policy to give drivers 100 percent of all their tips.