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Amazon will pay $61.7 million to Flex drivers after wage theft allegations

Amazon will pay a $61.7 million fine to settle allegations the company had failed to properly pay out tips to its Flex delivery drivers, the Federal Trade Commission (FTC) announced on Tuesday. The fine stems from a payment change the company implemented in late 2016. At the time, Amazon said Flex drivers, which use their own cars to deliver packages and groceries for Prime Now and Whole Foods, could earn $18 to $25 per hour, plus tips for their work. That same year, it put into place a new payment policy, which the FTC says Amazon did not properly disclose to drivers, that saw it pay Flex drivers a lower hourly rate. Over a timeframe of two-and-a-half years, it used the tips they earned to make up the difference between the rate it had promised and the one it was actually paying out.

“In total, Amazon stole nearly one-third of drivers’ tips to pad its own bottom line,” FTC Commissioner Rohit Chopra said in a statement, accusing Amazon of “expanding its business empire by cheating its workers.”

“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,” a spokesperson for Amazon told CNBC.

Amazon will pay out the $61.7 million fine to the FTC, which will use the money to compensate drivers. The agency says the fine represents the full amount of money shorted drivers between 2016 and 2019. As part of the settlement, the FTC is also prohibiting Amazon from misrepresenting how it compensates drivers in the future. The company also can’t make a change to how tips factor into someone’s compensation without first obtaining their consent.

Notably, the settlement only includes the money that was withheld from drivers, as the FTC does not have legal authority to impose punitive fines on companies that break the law. But in a press conference announcing the settlement, FTC Commissioner Noah Phillips called on Congress to grant the commission greater enforcement powers so that it could institute more severe penalties in the future.

“Prevailing law does not provide for penalties for conduct like this,” said Phillips told reporters. “We’re calling on Congress to give us the authority to go after companies with more tools, specifically penalties and rule-making, so that we can better deter conduct like this from ever occurring in the first place.”

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