In a press release issued Tuesday, the Federal Trade Commission (FTC) announced the return of $60 million in compensation to more than 140,000 Amazon Flex drivers, participants of the independent contractor delivery program. According to the FTC, the funds will serve as reimbursement for tips that it accused Amazon and its subsidiary Amazon Logistics (together, Amazon) of illegally withholding from drivers between 2016 and 2019.
According to the FTC’s administrative complaint, AmazonFlex is a service launched in 2015 through which qualified drivers may register to make deliveries to Amazon customers. Drivers are reportedly paid as independent contractors and responsible for their own gas, insurance, vehicle repairs, and other expenses. For some deliveries, Amazon reportedly permits customers to tip their drivers.
The FTC alleges that Amazon represented both to Amazon Flex drivers and customers that it would pass electronically registered tips along to drivers in their entirety, but apparently it did not make good on that promise. Over a two-and-half year period, the company allegedly siphoned off nearly one-third of customer tips to subsidize driver base pay, the complaint contends. The FTC claims that the company only stopped the illicit practice once it became aware of the agency’s 2019 investigation.
In June, the FTC voted 4-0 to approve a settlement with Amazon. Under the terms of the agreement, Amazon agreed not only to surrender the money but also to refrain from making future pay misrepresentations.
Now, the FTC will be sending nearly 140,000 checks and 1,621 PayPal payments to Amazon Flex drivers. “Drivers who had more than $5 withheld by Amazon will receive the full amount of their withheld tips. The highest amount going to a single Amazon Flex driver is more than $28,000, while the average amount is $422,” the press release explained.
Other Flex driver lawsuits, like one filed in the District of New Jersey, are currently pending. Another class action alleging that Amazon illegally monitored ‘closed’ Flex driver Facebook groups is on appeal, after the Northern District of California refused to compel arbitration.
An Amazon spokesperson provided the following statement to Law Street: “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. Amazon Flex delivery partners play an important role in serving customers every day, which is why they earn among the best in the industry at over $25 per hour on average across the country.”