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Amazon to Pay More Than $61 Million to Flex Drivers Over Withheld Tips

California Appellate Court Holds Amazon Responsible for Exploding Hoverboard

Amazon will pay more than $61.7 million to Flex drivers from whom the company withheld the full amount of customer tips to settle an investigation launched by the Federal Trade Commission (FTC). According to a report in the Los Angeles Times, this settlement comes nearly two years after the LA Times first exposed that Amazon was dipping into customer tips to cover the base pay guaranteed to Flex drivers who primarily deliver Amazon Fresh, Prime Now and other orders. The FTC says that this settlement money will reimburse Flex drivers whose tips Amazon withheld for more than two years.

Tip-Dipping Practice

Amazon had promised its Flex drivers a guaranteed minimum base pay for each order, which the company said included 100% of customer tips. But, the Times reported that Amazon used those tips to subsidize its own payment to workers. For example, in one case, a driver who was sent out to deliver an order to his own home tipped himself $12. His base pay for that order was $27. The driver got $30 for that order, which the company said included 100% of the tip. But, as it turned out, Amazon only contributed $18, the Times reported.

Just a few months after this was exposed, the FTC notified Amazon that it was going to initiate a probe and asked for records about its payment policies for Flex drivers. Amazon changed its practice after learning about the FTC investigation. In August 2019, the company sent out an email to drivers saying it would no longer subsidize base pay using tips and would give them a complete breakdown of how much they were being paid for each order.

What is California Law?

California’s Labor Code Section 351 prohibits employers and their agents from sharing in or keeping any portion of a gratuity left or given to one or more employees by a customer or patron. It is also illegal for employers to make wage deductions from tips or use tips as direct or indirect credits against an employee’s wages. The law states that tips are the sole property of the employee or employees to whom they are given.

In this case, the Los Angeles Times must be commended for its stellar watchdog reporting, shedding light on Amazon’s tip-dipping practice. It was their investigative report that led to the FTC launching an investigation. We are pleased to note that the drivers whose tips were stolen from them will be reimbursed. Wage theft in any form is unacceptable. If you believe your employer has not paid your due wages, please get in touch with an experienced California employment lawyer to obtain more information about pursuing your legal rights.


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