Walmart Settles $100 Million Lawsuit Over Misleading Pay Practices in Spark Driver Program
Walmart has agreed to a $100 million settlement with the Federal Trade Commission (FTC) to resolve allegations of deceptive pay practices within its Spark Driver program. This service employs gig workers to deliver online orders from local stores to customers. The retailer faced accusations of misleading drivers about their base pay and tips, and of falsely informing customers that 100% of their tips would go to the drivers, which was not always the case.
The FTC’s complaint, supported by the states of Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah, and Wisconsin, alleged that since 2021, Walmart had misrepresented Spark Driver earnings. Specific allegations included:
– Tip Splitting: Walmart was accused of dividing a single customer’s order among multiple drivers, leading to the splitting of tips. Customers were under the impression that their entire tip would go to a single driver.
– Uninformed Tip Removal: In batch orders, Walmart reportedly removed tips from some orders without notifying the drivers.
– Unfulfilled Tip Promises: Drivers were promised tips in advance of accepting orders, but in instances where Walmart failed to collect a tip from the customer, drivers received no tip.
– Base Pay Reductions: After drivers accepted offers, Walmart allegedly reduced their base pay or misrepresented incentives that could have provided additional earnings.
These practices reportedly resulted in drivers losing millions of dollars they were promised and led to thousands of consumer complaints.
As part of the settlement, Walmart is required to implement an earnings verification program to ensure drivers receive the earnings and tips they were promised. The company is also prohibited from adjusting base pay, incentives, or tips after the initial offer, except in cases where the driver fails to provide the service or a customer cancels. Additionally, Walmart is banned from misrepresenting earnings in future driver offers.
Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, emphasized the importance of transparency in labor markets, stating, Labor markets cannot function efficiently without truthful and non-misleading information about earnings and other material terms.
