Amazon recently agreed to an approximately $62 million settlement with the Federal Trade Commission (FTC) over allegations of tip-pocketing. According to coverage by Vox Media, the company allegedly used customer tips to subsidize the guaranteed hourly wages of some delivery drivers. Amazon enticed gig workers to serve as delivery drivers with promises of $18 to $25, plus tips. From 2015 to 2016, Amazon paid these independent contractors appropriately as they completed deliveries for Prime Now, Amazon Fresh, and even Amazon.com.
Pocketing Tips and Obscuring Changes
Unfortunately, the FTC alleges that the company “surreptitiously changed its payment practice in late 2016 and began pocketing some customer tips to subsidize the company’s payments of $18 to $25 per hour.” Meanwhile, Amazon assured drivers they were still receiving tips, “intentionally failed to notify drivers of the changes to its pay plan,” and even tried to obscure the changes for drivers who might look into them. Instead of paying drivers $18 to $25 plus customer tips, the company used customer tips to ensure customers made at least $18 to $25 per hour and only paid out the tips that were left over.
The FTC claims this false promise cost Amazon Flex drivers more than $61.7 million in tips. While Amazon disagrees that its pay structure was unclear, the company settled for $61.7 million, which FTC officials say is the full amount owed to drivers. The FTC plans to distribute the entire settlement to affected drivers but has not yet established a system for the drivers to recoup their tips. Representatives from the FTC encourage Amazon Flex drivers to sign up for FTC updates to see if they are eligible for recovery.
A One-Two-Punch for Knocking Out Gig Worker Exploitation
Under the terms of the settlement, Amazon must notify drivers before changing the way Amazon Flex drivers and other independent contractors are tipped in the future. Still, FTC officials have asked Congress to allow civil penalties for first-time offenders like Amazon to make an example of the case and protect gig workers and consumers from misleading practices like the one described above. Coverage from BuzzFeed News suggests Amazon is not the only company to pocket drivers’ tips, and both DoorDash and Instacart reversed similar practices after public backlash.
FTC commissioners call Amazon’s behavior “outrageous” and argue that civil penalties could be a “one-two punch” for knocking out the exploitation of gig workers. Nevertheless, the FTC is proud of its ability to recoup lost wages for workers, and Amazon said in a statement it is “pleased to put this matter behind us.”
How To Get Your Money Back
If you have been affected by Amazon’s tip-pocketing scheme or shorted tips in any other context, you may need to speak to an attorney. Although the FTC is currently handling the Amazon Flex settlement, you may be entitled to legal action.
Contact Donati Law, PLLC to learn more about filing a wage and hour violation claim – you may be able to recover compensation for yourself and other similarly-situated employees.
It all starts with a phone call to (901) 209-5500 or a quick online message.
