It's All of the "Gig Economy" Companies

Amazon just settled a lawsuit where it stole tips from its drivers.

The short version is, they used tip data to lower rates to drivers in specific areas.

This is the very epitome of how companies like Amazon, Uber, Lyft, DoorDash, etc. use opaque algorithms to cheat their employees:

The US Federal Trade Commission on Friday announced the approval a consent order against Amazon that requires the company to pay $61.7m to resolve charges that for two and a half years it took tips intended for Amazon Flex drivers and concealed the diversion of funds.

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The tech giant launched its Flex service in 2015, promising drivers – which it classified as independent contractors and referred to as "delivery partners" – that it would pay $18-25 per hour for the delivery of goods from Amazon.com, Prime Now (household goods), Amazon Fresh (groceries), and Amazon Restaurant (takeout).

Amazon's ads made promises like, "You will receive 100 per cent of the tips you earn while delivering with Amazon Flex."

However, during the period from late 2016 through August 2019, drivers – who, as independent contractors, paid for their own car, fuel, maintenance, and insurance – saw only a portion of the promised gratuity when customers opted to tip.

That's because Amazon allegedly, without telling its drivers, shifted to a "variable base pay" rate, which varied by location, wasn't disclosed to drivers, and was frequently lower than the promised hourly range.

"Under the variable base pay approach, for over two and a half years, Amazon secretly reduced its own contribution to drivers’ pay to an algorithmically set, internal 'base rate' using data it collected about average tips in the area," the FTC complaint [PDF] explains.

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To make up any difference between the base rate and the advertised minimum, Amazon is said to have used some or all of any tip left by customers to meet its payment commitment. For example, if Amazon set a base rate for a region at $12 and the customer left a tip of $6 via Amazon's electronic tip collection system, then the company paid the driver only $12 and augmented the payment with the $6 tip, instead of paying the $18.

This is not enough.  People should be going to jail for this, and not just white collar prison.

This should be hard time in a hard prison, not just because of the scope and callousness of the theft, but because the threat of a few years in Terre Haute will get people to turn on higher ups in the operation.

They stole from thousands of their employees, and they did so knowingly, there are numerous internal emails detailing the reputational risk to Amazon.