Walmart agrees to $100 million FTC settlement over driver pay allegations

Walmart Inc. (NASDAQ: WMT) agreed to a $100 million settlement to resolve allegations from the Federal Trade Commission and 11 states that the company misled delivery drivers about their potential earnings through its Spark Driver program.

The FTC, joined by Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah and Wisconsin, alleged that Walmart showed drivers inflated base pay and tip amounts. The complaint also claims Walmart deceived customers by falsely stating that 100% of customer tips would go to drivers.

According to the complaint filed in U.S. District Court for the Northern District of California, Walmart engaged in several practices including failing to notify drivers that tip payments had not been preauthorized and could fail if customers could not cover the cost. The company also allegedly reduced base pay and tips when removing orders from batched deliveries without properly notifying drivers.

The FTC alleged Walmart misrepresented incentive pay by failing to disclose all conditions required to earn promised payments and sometimes denied earnings even when drivers met the conditions. The agency also claimed that despite promising customers that "100% of tips go to the driver," Walmart sometimes failed to provide collected tips to drivers.

"Labor markets cannot function efficiently without truthful and non-misleading information about earnings and other material terms," said Christopher Mufarrige, Director of the FTC's Bureau of Consumer Protection.

Under the settlement, Walmart must implement an earnings verification program to ensure drivers receive promised payments. The company is prohibited from modifying offers for base pay, incentive pay or tips after the initial offer except in limited circumstances. Walmart is also banned from misrepresenting earnings information in delivery offers to Spark drivers.

The Commission authorized the complaint and proposed settlement order by a 2-0 vote.

You May Also Be Interested In

• Steel Partners challenges InMode board over governance and disclosure gaps
• After-Hours Stock Movers: NFLX, ISRG, KO, AA, RGNX
• Grok launches automated task scheduling with email triggers