Amazon to pay $61.7million for withholding drivers’ tips

Amazon has been ordered to pay over $61.7million in compensation to drivers for withholding tips, following charges by the US Federal Trade Commission (FTC).

The company - which now has a market value of over $1.5 trillion - cut Amazon Flex drivers’ pay from the advertised rate of $18-25 without telling employees, and used tips to make up the difference. The FTC has stated that Amazon “intentionally failed” to notify drivers of the change.

Hundreds of drivers sent complaints to the company, after they realised their earnings had been slashed, but were reassured by Amazon that they would continue to receive “100 percent of their tips”.

Amazon - which introduced the wage changes in 2016 - stopped taking the tips only after being alerted of the investigation against them in 2019, according to the Federal Trade Commission (FTC) complaint.

“Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future,” Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, stated

Amazon has stated that its Flex drivers “earn among the best in the industry.”

Gig economy work

Amazon hires its Flex delivery drivers as independent contractors who use their own vehicles to deliver parcels. By hiring gig workers, the company avoids having to provide health insurance, paid vacations, scheduled pay increases or vehicle maintenance and upkeep.

Although gig work has been praised as a flexible option by some workers, Amazon has been criticised for giving short delivery windows and kicking workers off the system for missing slots, encouraging dangerous driving. Drivers also have to wait for delivery options to show up on the Flex app, meaning work is not guaranteed, and to return any packages that couldn’t be delivered back to the warehouse unpaid at the end of their shift.

Studies have suggested that once Flex drivers have accounted for essential on-the-job expenses such as fuel, their earnings amount to just $5 to $11 an hour, rather than the $18 to $25 advertised. Minimum wages in the US range from $7.25 to $15 an hour, depending on the state.

Workers and civil society have long been calling for tighter regulations on gig companies.

William Kovacic, former chair of the FTC and a professor at George Washington University Law School says that the settlement ruling from the FTC is “unmistakably an indication of the agency’s commitment to devoting additional attention and enforcement resources to monitoring the behavior of gig employers and to punish misrepresentation and fraud.”

The same day at the ruling, FTC commissioner appealed to Congress for more powers to to prevent and penalise companies misleading contractors and consumers.

Jeff Bezos steps down

Jeff Bezos nonetheless succeeded in dominating Amazon-related news by stepping down from his position as company CEO just hours before the FTC announced the fine.

Bezos has accrued almost four times the amount owed to the drivers every day since the pandemic began.  He will be moving to a position as ‘executive chair’ of the company.

Andy Jassy, currently CEO of Amazon Web Services (AWS), will succeed Bezos as head of the company. Ver.di union in Germany released a statement following the announcement:

“We don’t care if Amazon’s top boss is named Jeff Bezos, Andy Jassy or Donald Duck. What is crucial is whether the change in leadership at the group means a fundamental rethinking regarding respect for workers and union rights. Little points to this right now.

“Jassy is head of Amazon Web Services, and this computer cloud network operator is jointly responsible for the massive emission of coal and other pollutants.”