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Walmart has agreed to pay $100 million to settle allegations that it misled gig workers about their pay and tips in its delivery program, according to the Federal Trade Commission. The settlement, announced Thursday, resolves claims that the retail giant deceived drivers in its Spark delivery service about potential earnings.
The FTC, joined by 11 states including California, Illinois, and Pennsylvania, accused Walmart of showing drivers inflated base pay and tip amounts in its crowdsourced delivery program. According to regulators, the company also falsely told customers that all tips would go directly to drivers, when in reality, Walmart failed to inform drivers that tips would be split when deliveries were handled by multiple people.
“Labor markets cannot function efficiently without truthful and nonmisleading information about earnings and other material terms,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, in the announcement.
The settlement requires Walmart to implement an earnings verification program to ensure drivers receive promised earnings and tips. The company has already begun issuing payments to affected drivers and says it will continue making additional payments as needed.
Launched in 2018, Walmart’s Spark program enables gig workers to sign up for delivery opportunities with the retailer. The service has become increasingly important to Walmart’s business strategy as it competes with Amazon and other e-commerce rivals in the rapidly growing delivery space.
The case highlights the growing scrutiny facing gig economy platforms across the United States. Regulators have increasingly focused on how these companies communicate earnings potential to workers and handle customer tips. Similar cases have been brought against food delivery and rideshare companies in recent years.
The 11 states participating in the action alongside the FTC include Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah, and Wisconsin. The broad coalition suggests widespread concern about pay transparency in the gig economy.
Walmart has credited its swift online delivery capabilities for helping drive recent sales growth. The retailer’s e-commerce business increased by 27% during its fiscal fourth quarter, accounting for 23% of overall sales. This growth underscores the strategic importance of the Spark delivery program to Walmart’s business model, particularly as consumer shopping habits continue to shift toward online purchasing with home delivery.
In a statement emailed to The Associated Press, Walmart said it values “the hard work and dedication of the drivers who deliver great service and products to our customers.” The company also noted that it is “continuously improving procedures to ensure fairness and transparency for drivers.”
This settlement comes at a time when labor practices across the retail and gig economy sectors face increasing scrutiny. Workers’ rights advocates have long raised concerns about pay transparency, tip policies, and working conditions for gig workers who lack traditional employee benefits and protections.
The $100 million penalty is one of the larger settlements the FTC has secured in recent years relating to gig economy practices. The size of the settlement likely reflects both the scale of Walmart’s operations and the seriousness of the allegations.
Industry analysts suggest that as competition for delivery drivers intensifies across retail and food delivery sectors, companies may face pressure to improve transparency around earnings and working conditions to attract and retain workers in this competitive labor market.
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4 Comments
While it’s good the FTC intervened, one has to wonder how many other companies might be engaging in similar misleading tactics with their gig workers. More oversight and enforcement may be needed to protect vulnerable workers in the rapidly expanding gig economy.
It’s good to see the FTC taking action against deceptive practices that undermine the integrity of the gig economy. Workers deserve to be informed about their actual earnings potential when signing up for these types of delivery services. Hopefully this serves as a lesson for other companies to be upfront.
This is a concerning situation where Walmart allegedly misled delivery workers about their pay and tips. It’s important for companies to be transparent about compensation and not take advantage of gig workers. Hopefully, the settlement will lead to better practices and ensure workers are properly paid.
The $100 million settlement seems like a significant penalty, though it’s unclear if that will be enough to deter Walmart and other large companies from similar deceptive practices in the future. Maintaining trust between workers and employers is crucial in the gig economy.