Walmart has reached a settlement of $100 million to resolve allegations of misleading its delivery drivers about their earnings, a situation that has reportedly cost workers tens of millions of dollars in lost pay. This settlement follows a case initiated by the Federal Trade Commission (FTC) in conjunction with 11 states, targeting the retailer’s practices concerning driver compensation.
The FTC’s complaint highlights that Walmart misrepresented critical information regarding the base pay, incentive pay, and tips provided to drivers within its Spark Delivery network, which has been operational since 2021. The Spark Program was launched in 2018 and facilitates gig workers to deliver products for Walmart and other retailers like Home Depot and 1-800-Flowers.
According to the FTC, drivers in the Spark program typically make decisions based on estimated earnings displayed in the Spark app. However, the agency claims that Walmart provided misleading information, leading drivers to overestimate their potential earnings. One of the main allegations is that Walmart displayed the total tip amount for an order to all drivers involved, while that tip was actually shared among them, effectively lowering their actual earnings.
Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, expressed concern over the implications of such misleading practices, asserting that transparent and accurate information is critical for the proper functioning of labor markets.
Additionally, the FTC noted that Walmart misled customers by claiming that 100% of customer tips would be allocated to drivers, while this was not the case. The agency insists that Walmart was aware of these discrepancies but failed to take corrective action, which constitutes a violation of FTC guidelines, federal law, and several state regulations.
In response to the allegations, a Walmart spokesperson confirmed that the company has begun issuing payments to affected drivers and will continue to do so as necessary. This settlement offers a glimpse of hope for the affected workers, potentially restoring some measure of fairness in their compensation as Walmart reassesses its transparency in driver communications.