District of Columbia Attorney General Karl Racine has sued Amazon for using drivers’ tips to pay their standard wages, seeking a penalty that federal consumer protection agencies could not.
Amazon settled with the Federal Trade Commission last year after a lawsuit alleging it withheld more than $60 million (or about one-third of total customer tips) from Amazon Flex drivers over the course of two and a half years. But while the FTC took that money to distribute back to drivers, it had no mechanism to impose higher penalties. “Amazon has so far escaped all other consequences,” Racine’s complaint say. The new lawsuit asks a DC court to assess further financial damages, aiming to “hold Amazon fully accountable for its unlawful actions and send a clear signal to employers not to divert tips for their own benefit.”
“Companies should not be treated more leniently than people.”
Amazon Flex started operating in 2015, allowing people to sign up as drivers to deliver products from Amazon, Prime Now, Amazon Fresh, and Amazon Restaurants. From 2016 to 2019, it urged customers to leave tips with a promise that “100 percent” of the money would be given to drivers. But this was only technically true – instead, news outlets revealed that it used the money to subsidize the basic pay drivers were promised. In response to public outcry, it discontinued the policy in 2019.
Racine’s office alleges that this violates DC’s Consumer Protection Procedures Act, which prohibits misleading information about merchants’ goods and services — such as, the complaint alleges, misrepresenting the payment option as a tip. “If an employee is caught stealing from his employer, he risks restitution and punishment,” the indictment says. “Companies should not be treated more leniently than people: when a company is caught stealing from its employees, it is not enough for the company to pay back the amount stolen.”
And Amazon isn’t the only tech company to have diverted tips to pay wages that employees were already promised. The city of Chicago sued DoorDash last year in part over a similar tipping policy, which DoorDash discontinued in 2019.