Amazon will pay $61.7 million to Flex drivers to settle allegations of stolen tips, after an extensive investigation by the US Federal Trade Commission. The figure represents the total amount of allegedly withheld tips over the two and a half years that Amazon Flex’s controversial base pay system was in place. Amazon also agreed to new restrictions on how it communicates wage information to drivers.
“In total, Amazon stole nearly one-third of drivers’ tips to pad its own bottom line,” FTC Commissioner Rohit Chopra said in a statement, accusing Amazon of “expanding its business empire by cheating its workers.”
Reached for comment, Amazon rejected the idea that its pay structure had stolen wages, or was otherwise unclear. “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 company representative told The Verge.
Instituted in late 2016, the variable base pay system came under scrutiny after reporting by the Los Angeles Times’ Johana Bhuiyan in February 2019. Amazon initially defended the practice, saying drivers still received 100 percent of the tips sent by customers, even in instances when those tips displaced base pay that would otherwise have been provided by Amazon.
According to the FTC complaint, Amazon used this ambiguity to recruit drivers with promises of high base wages and the potential for significant tips — then pad its own bottom line by using tipped income to make up much of the paid base wage.
In hiring materials, workers were told they would keep 100% of their tips, and separately guaranteed a base wage between $18 and $25 per hour. The drivers were not informed that the tips would sometimes be used to reimburse the base wage, resulting in some of the tipped amount going to Amazon rather than the driver.