Tech giants are no stranger to scandals and Amazon is not an exception. The Seattle-based company will pay $61.7 million to settle allegations by the Federal Trade Commission (FTC). The allegations concern failure of the company to pay Flex delivery drivers the full amount of tips received from customers.
It is worth noting that, the FTC voted 4-0 in favour of the settlement, which was announced on Tuesday. According to the complaint, Amazon in 2016 shifted from paying drivers the promised rate of $18 to $25 per hour, plus tips, to paying drivers a lower hourly rate.
Based on the information provided by the commission, the company intentionally failed to notify drivers of this change. The tech giant used the tips to make up the difference between the promised rate and the new, lower rate. Importantly, instead of passing along 100% of customers’ tips to drivers, as it promised to do, the company used the money itself.
Thanks to the commission’s decision drivers will be able to return tens of millions of dollars in tips that the tech giant misappropriated. Moreover, the decision requires Amazon to get drivers’ permission before changing its treatment of tips in the future.
Amazon and its employees
Importantly, even though Amazon does not agree with the position that it did something wrong, the company is happy that it settled this issue. According to the company, Flex drivers earn among the best in the industry at more than $25 per hour on average.
As a reminder, Amazon Flex operates similarly to Uber. Contracted delivery drivers pick up shifts on-demand to deliver Amazon packages or Whole Foods orders to customers’ doorsteps. Interestingly, the service launched in 2015 uses drivers to deliver packages from form their own vehicles and operates in more than 50 cities across the country.
The company continued using the new pricing model until August 2019, following the launch of the commission’s investigation. However, the tech giant returned to a pay model where it pays Flex drivers a base rate, plus 100% tips.
Interestingly, as part of the settlement, the company will pay more than $61.7 million to the Federal Trade Commission. The commission will use the money to compensate Flex drivers. The commission’s decision once more demonstrated the importance of this agency, as the FTC protected the rights of delivery workers.