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How Did Amazon Violate Federal Labor Laws By Holding Back Tips Paid To Flex Customers?

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Article: "Amazon Ordered to Pay $62 Million for Withholding Tips To Delivery Drivers" (Source: The New York Times, February 2, 2021) Summary: Amazon has been ordered to pay a settlement of $61.7 million to Flex drivers who had their tips withheld by the company. The lawsuit accused Amazon of violating federal labor laws by not giving Flex drivers the full tips that customers had paid them. Amazon’s Flex program uses independent contractors to deliver packages to customers. Under the Flex program, customers can tip drivers through the app, and Amazon had promised that drivers would receive 100 percent of their tips. Interesting Facts: The lawsuit was filed in 2019 by the Federal Trade Commission (FTC) and charged Amazon with violating the …show more content…

Rule: According to federal labor laws, an employer cannot withhold any part of an employee’s tips. Tips are the property of the employee who earned them. Employers cannot use tips as a credit toward the employee’s minimum wage obligations, or as a means to apply toward any expenses incurred in running the business, except for a valid tip pool. Analysis: The court found that Amazon had violated federal labor laws by not giving Flex drivers the full tips that customers had paid them. Instead, Amazon had used the tips to make up the difference between what was promised to be paid to the drivers and the actual funds needed for minimum payment. Such an act constitutes wage theft, which is a violation of federal labor laws. Amazon’s activities were found to be a deception of the drivers and the customers as the company had promised that drivers would receive 100% of their tips. Conclusion: The court ordered Amazon to pay a settlement of $61.7 million to compensate drivers whose tips were withheld. Additionally, Amazon is required to obtain the drivers' explicit consent before making any changes to their …show more content…

Rule: Federal labor laws stipulate that independent contractors are not entitled to the same protections afforded to employees, such as a minimum wage, overtime pay, and other benefits. However, some states have enacted laws to protect independent contractors from wage theft and exploitation. Analysis: The court ruling against Amazon shows that independent contractors can be exploited and their rights violated. To prevent such situations in the future, lawmakers need to consider strengthening the laws that protect independent contractors and hold employers accountable for wage theft. Companies also need to be transparent about the compensation structure for independent contractors and ensure that tips are not withheld from them, as this can have a significant impact on their earnings. Conclusion: To prevent independent contractors from being exploited and their tips withheld, lawmakers need to consider strengthening the laws that protect them, and companies need to be more transparent about their compensation structure. Ensuring fair compensation for independent contractors will not only benefit them but also help create a more equitable

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