Amazon has been ordered to pay almost 62 million to flex workers following the outcome of a recent probe by the U.S. Federal Trade Commission (FTC).
Amazon is to officially pay $61.7 million to flex workers following accusations that they stole tips from company drivers. The amount equals the tips that Amazon allegedly retained during a two-and-a-half-year period where Amazon Flex was using its questionable base pay system. “In total, Amazon stole nearly one-third of drivers’ tips to pad its own bottom line,” FTC Commissioner Rohit Chopra said in a statement, charging Amazon with “expanding its business empire by cheating its workers.”
According to the FTC, Amazon hired thousands of drivers and promised them large base wages and room to earn generous tips. Unfortunately, the company used the worker’s tips to pay base wages, meaning that workers never received tips they earned which Amazon promised would be $18 to $25. Additionally, some of the tips went directly to Amazon instead of workers.
“Amazon received hundreds of complaints from drivers after enacting the change, as drivers became suspicious when their overall earnings decreased,” the commission said in its official statement. “Drivers who complained received form e-mails falsely claiming that Amazon was continuing to pay drivers 100 percent of tips.”
The company ended its company base pay system back in August 2019 after learning about the FTC’s investigation three months prior. “By the time this scheme was exposed in late 2019, Amazon Flex was far more established,” wrote Chopra. “This conduct raises serious questions about how Amazon amassed and wielded its market power.”
Amazon Flex launched its base pay system in 2017, using drivers’ tips to pay their base salaries. The pay system became widely criticized two years later, with the company initially advocating for the practice by claiming that drivers still got 100 percent of their tips, even when the tips replaced base pay.
Meanwhile, the company announced on Tuesday its founder and CEO, Jeff Bezos, would be stepping down and handing over the reins to Andy Jassy, chief executive of Amazon Web Services, the company’s fast-growing cloud computing business.
The company announced that Bezos would still remain on the board but would transition to the position of executive chair of the company.
The surprise news came as Amazon released its latest financial results. Few companies have thrived like Amazon during the coronavirus pandemic, and in the last three months of the year, the company recorded sales of more than $100bn for the first time.