Pay deception costs employer $100 million in gig drivers settlement
A nationwide employer agreed to a $100 million judgment to settle allegations from the Federal Trade Commission (FTC) and 11 states claiming that the company caused delivery drivers to lose tens of millions of dollars’ worth of earnings by deceiving them about the base pay, incentive pay, and tips they could earn.
The employer uses a driver service, where gig workers use an app to decide whether to accept “offers” to deliver goods to customers. They base their decisions on the employer’s statements about the base pay and tips that drivers could expect if they complete the work.
Employer’s deceptive practices
The complaint alleged that the employer engaged in several deceptive practices:
- Tips not guaranteed: The employer allegedly deceived drivers about the amount of tips they would receive from an order. The company failed to notify drivers that, unlike the payment for the goods being delivered, the payment for the advertised tip amount hadn’t been preauthorized, and therefore drivers wouldn’t receive that amount if the customer was unable to cover the cost of the tip or if the charge otherwise failed. The company also failed to tell drivers that it would split tips when a customer’s delivery was split across multiple drivers.
- Base pay varied: The employer wasn’t forthcoming to drivers about the amount of base pay and tips they would receive when the employer modified “batched” offers (delivering goods to multiple customers during one trip). The company failed to tell drivers that it would reduce their base pay and/or tips when it removed orders from batched orders. In many instances, the employer either failed to notify drivers at all about the change in base pay (and tips) or only notified them of the change in their earnings after they completed the delivery.
- Incentive pay falsified: The employer misrepresented the incentive pay drivers could earn in exchange for completing certain tasks. The company failed to disclose all the conditions drivers had to meet to earn it and denied the promised earnings on the basis that drivers failed to meet all the conditions. For example, the employer offered to give drivers a referral incentive when they referred new drivers, yet failed to adequately disclose that it would pay the incentive only if the newly recruited driver performed deliveries in a particular zone or for a particular store. Even when drivers met the incentive conditions, the employer sometimes failed to provide the promised pay.
- Customers deceived: The employer allegedly deceived its customers by claiming that “100 percent of tips go to the driver.” Despite this promise, the employer, on multiple occasions, failed to give the tips to drivers and didn’t refund the tips to customers.
The FTC alleged that these deceptive business practices violated the FTC Act and the Gramm-Leach-Bliley Act by obtaining drivers’ bank and other financial information while deceiving them about the amount of base pay and tips they would earn from deliveries.
As part of the proposed order, the employer is:
- Required to implement an earnings verification program to ensure it pays drivers promised earnings and tips;
- Prohibited from modifying an offer for base and incentive pay or tips after the initial offer except under limited circumstances, such as when the driver fails to provide the required service or the customer cancels an order; and
- Banned from misrepresenting the earnings and other information included in the delivery offers it makes to drivers.
Key to remember: Employers must not only comply with the federal Fair Labor Standards Act in relation to employee pay; they must also comply with the FTC.

























































