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Amazon ends controversial practice of using tips to meet drivers' wage guarantees

Johana Bhuiyan, Los Angeles Times on

Published in Business News

Amazon delivery drivers were surprised to learn earlier this year that the e-commerce giant would at times dip into their tips to cover their promised wages. That's about to change, according to an email the company sent drivers on Wednesday.

Amazon will start to give a full breakdown of how much Flex drivers, who deliver for the company's Prime Now, Fresh, or Whole Foods services, are being paid for each shift, including how much of the total payment comes from the tip.

The Times has also confirmed that the company will no longer use supplemental earnings or tips to cover the minimum pay, and will pay drivers their promised minimum out of the company's own pocket.

The disclosure comes after The Times revealed in February that Amazon would at times use tips from customers to contribute to drivers' guaranteed wages, reducing the amount Amazon needed to pay. At the time, Amazon guaranteed $18 to $25 an hour, but contributed an average of $19 an hour to that pledged minimum hourly pay.

"Amazon will always contribute at least $15 per scheduled hour to driver pay, and often more, based on location and demand," Amazon spokesperson Rena Lunak said in response to questions from The Times. "As always, for deliveries with tipping opportunities, drivers will receive 100% of the tips."

In the email, the company characterized the commitment to paying at least $15 and up to $19 an hour out of its coffers for all shifts as a raise from its previous minimum contribution.

"While earnings vary by region and block, with the change to Amazon's minimum contribution, we expect nationwide average earnings for these blocks to increase to more than $27 per hour," the email to drivers read.

One driver, who asked not to be named for fear of being deactivated, celebrated the announcement.

"Finally," the driver said. "This is definitely a win."

 

Others are expressing confusion in Facebook groups about whether this would actually be an increase, given the lack of transparency previously around how much Amazon was contributing toward their hourly pay. In the past, drivers were promised a minimum of $18 an hour. However, in some cases that did not all come from Amazon.

Without a clear breakdown of each payment, drivers -- who had speculated that their tips were being used to pad the company's contribution -- had to come up with creative ways to confirm their suspicions. One driver, Jeff Lee, said he tipped himself $12 on a package he was assigned to deliver to his own home. His base pay for the 1 1/2-hour shift was supposed to be $27. Including tips, he received a bit more than $30, suggesting Amazon contributed only $18.

"The problem most drivers have with Amazon is there is zero transparency about our pay," Lee said in February.

At the time, the language in Amazon emails to drivers and within the delivery app said base fares included tips. However, images included in the email sent to drivers Wednesday outlining the new breakdown of fares show the company has changed the language to say the payment for each shift would be the base fare "+ tips."

Several other companies have come under fire for similar tip-taking practices, including Instacart and Doordash -- the latter of which is still dipping into driver tips about a month after announcing it would cease the practice.

(c)2019 Los Angeles Times

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