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"Oh, so that's how tips work."
The Federal Trade Commission has ordered Amazon to pay out $61.7 million to the company's Flex drivers, following an investigation that discovered the company was keeping nearly one-third of driver tips.
This isn't the first time gig drivers have made this complaint, either. In 2019, a class-action lawsuit against DoorDash claimed tips were being diverted to pay driver's salaries rather than being paid out as, you know, tips.
On paper, Amazon's Flex driver gig seems like a good one. Flexible hours, independent work, and base pay between $18 and $25 an hour, plus tips. They deliver things like AmazonFresh, Prime Now, and other same-day deliveries.
Ads for Flex driver promised applicants, "You will recieve 100% of the tips you earn while delivering with Amazon Flex." But a 2019 investigation by the Los Angeles Times discovered that, just like DoorDash, Amazon was using tips to cover the base wage they promised their drivers. But, as Acting FTC Director Daniel Kaufman put it:
"Rather than passing along 100 percent of customers' tips to drivers, as it had promised to do, Amazon used the money itself."
Moreover, Amazon shifted to paying a lower hourly rate and using tips to make up the difference without informing drivers of the change.
After the FTC notified Amazon that it was launching an investigation, the company sent an email to drivers saying that they would no longer subsidize base pay through tips. But, there were still two and a half years of skimmed tips to deal with. In addition to paying out more than $60 million in tips, the FTC is requiring that Amazon not make any changes to the way drivers receive tips from customers without the drivers' written consent. They also cannot promise drivers 100% of their tips if they are being used to cover base pay.
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