Amazon to Pay $61.7 Million to Settle Wage Theft Case

 In Employment Law, Overtime Law, Wage Law

Amazon Wage Theft

Wage theft is unlawful and happens more often than employees would imagine. Worse still, employers engage in wage theft intentionally and, often, purposely conceal their wage theft and lie about it when challenged. A case in point is Amazon, which has just agreed to settle a wage theft investigation by the Federal Trade Commission (“FTC”). Amazon agreed to pay $61.7 million to settle the investigation into its wrongdoing. The FTC has indicated that the full settlement would be paid over to the affected workers. See FTC media release here. Employees who think their employer has engaged in illegal tip-diversion and other forms of wage theft should contact proven and dedicated Employee Rights attorneys like the ones at Herrmann Law. Wage theft is wrong, and employers who engage in the practice should be held accountable.

Regarding Amazon, the FTC investigation determined that the company engaged in the theft of customer tips for gig-work drivers. In 2015, Amazon launched what it called “Amazon Flex,” a gig-driver program. Drivers could sign up and work as independent contractors for Amazon with drive-as-you-want flex schedules. Amazon promised decent hourly wages, from $18-$25, calculated based on a flat-fee deliveries-per-hour pay structure with a minimum hourly rate guaranteed. Importantly, to induce gig-workers to sign up, Amazon stated that its Flex drivers would receive 100% of tips that were given by consumers for certain delivery services including Prime Now, AmazonFresh, and store deliveries. Indeed, as quoted by the FTC, Amazon’s Terms of Service for the Amazon Flex program stated explicitly: “Amazon will pass through any tips payable to you.” This was touted as a way for Flex drivers to earn more than $25 an hour. Amazon also told consumers that tips would be paid to the drivers.

However, in late 2016, Amazon began stealing the Flex drivers’ tips, concealing the theft, and denying that the drivers were not receiving 100% of their tips. As the FTC charged, Amazon changed the Amazon Flex program in late 2016 without telling the drivers (or telling consumers). Instead of paying 100% of tips over to the drivers, Amazon started remitting only about two-thirds of the tips and using the other third to offset the guaranteed minimum hourly rate that Amazon promised. Sometimes, the entire tip was stolen. As an example cited in the FTC’s Complaint, “… if Amazon’s base rate in the particular location was $12, and the customer left a $6 tip for the driver, then Amazon paid the driver only $12 and used the full customer tip of $6 to reach its [promised] minimum payment of $18 to the driver.”

In an effort to conceal the change in how tips were paid, Amazon not only did not tell its drivers and consumers, but changed its pay statements so that tips were no longer reported as a separate pay item. Now, tips were combined with earnings as a single lump sum. When some drivers, suspecting wage theft, challenged Amazon, Amazon sent out an email re-affirming that 100% of tips were paid to the drivers. This was false. Amazon also continued to falsely tell customers that “100% of tips are passed on to your courier.” According to the FTC, Amazon continued these practices for over two and a half years and only admitted that it was taking some of the drivers’ tips after the FTC opened its investigation

Amazon’s wage theft resulted in its Flex drivers being denied more than $61 million in tips.

Call the Wage Theft Attorneys at Herrmann Law Today

For more information, call the Employee Rights attorneys at Herrmann Law. If you think that your employer is stealing your tips or has engaged in violations of your rights as an employee, call us. We are proven, experienced, employee-focused attorneys representing workers across the United States in all types of workplace disputes. Use our Online Contact page or call us at (817) 479-9229.

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