'Amazon has all the power': How Amazon controls legions of delivery drivers without paying their wages and benefits

Hayley Peterson

Oct 4, 2018, 21:24 IST

'Amazon has all the power': How Amazon controls legions of delivery drivers without paying their wages and benefits

John Zeedick/AP Photos

Amazon's new $15 minimum wage won't necessarily affect delivery drivers.

Amazon can effectively control thousands of delivery drivers without claiming full responsibility for their wages, benefits, and working conditions, sources say.
These drivers are employed by third-party companies, called delivery service partners, or DSPs. Amazon puts these companies in charge of payroll and benefits, and the drivers won't necessarily get Amazon's new $15 minimum wage.
Amazon retains power over nearly every other aspect of these drivers' jobs, according to legal filings and interviews with more than 40 delivery workers including drivers, supervisors, courier company owners, and Amazon logistics managers.
This system has created a confusing chain of command for drivers, which some say has led to chronic problems. Amazon said this week it was changing how these delivery drivers are paid following reports of missing wages and lack of overtime.
This story follows an earlier investigation: Missing wages, grueling shifts, and bottles of urine: The disturbing accounts of Amazon delivery drivers may reveal the true human cost of "free" shipping.

There are thousands of drivers working full time out of Amazon facilities who deliver Amazon packages, meet daily with Amazon bosses, and in some cases, wear Amazon uniforms.

Their daily delivery routes and deadlines are set by Amazon. Amazon trains many of the drivers, provides them with on-the-road support, and gives them devices, called "rabbits," for package scanning and route navigation.

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Amazon uses the rabbits to track drivers' movements and has the power to eliminate drivers who aren't cutting it, two former Amazon managers told Business Insider.

But Amazon doesn't pay these drivers' wages.

It also doesn't offer them the protections, benefits, or other perks - like its new, highly-touted $15 minimum wage - that are afforded to its own employees. That's because none of these drivers actually work for Amazon.

The company instead employs these drivers indirectly through contracts with smaller third-party companies, called delivery service partners, or DSPs. Amazon's DSP network is like its own version of carriers like UPS and FedEx, which Amazon also uses to deliver its packages.

Amazon puts delivery service providers in charge of drivers' wages, insurance, health benefits, and vehicle maintenance.

Amazon, meanwhile, retains power over nearly every other aspect of these drivers' jobs, according to legal filings and interviews with more than 40 delivery workers including drivers, supervisors, courier company owners, and Amazon logistics managers.

For Amazon, this system of contracting delivery jobs is a cost-effective alternative to direct employment.

But it has created a massively confusing chain of command for drivers, which some say has led to chronic alleged problems with missing wages, lack of overtime, intimidation, broken delivery trucks, and grueling shifts that have lasted as long as 15 hours without time for breaks.

"The DSP contract-labor model is absolutely to mitigate risk and not take on the cost and obligation to actually employ people, so Amazon can move and scale fast," said a former Amazon logistics manager, who asked to remain anonymous for fear of retribution. "The DSPs are under such a financial pinch they are not always taking care of their vans or making sure they are keeping up standards."

Amazon is at the root of the problem, this person said.

"We create this pressure cooker. We are really turning the knobs on DSPs, and they are turning the knobs on drivers. And then at the end of the day we can take our hands off of it and say, 'Well, they are your employees.'"

Amazon said that while it doesn't directly control wage-setting and benefits, the company regularly audits its delivery service partners and requires that they abide by labor laws.

"Amazon has long supported small businesses like our Delivery Service Partners, and they are an important part of the long term success of the company," the company said. "We regularly receive feedback from our Delivery Service Partners to ensure we're providing the right tools and processes to help them operate successful businesses."

In an email seen by Business Insider, Amazon told these courier companies this week that they'd have to start electronically tracking and recording employees' hours using "time and attendance tracking" software provided by the payroll company ADP. The requirement, which takes effect November 19, followed an earlier Business Insider investigation that detailed numerous reports of missing wages and lack of overtime payments.

Courier companies are 'afraid' of Amazon

Amazon can "turn the knobs" on delivery service partners because it has total control over the companies' revenues, sources said. Amazon pays courier companies a set amount for each route delivered on any given day. The number of routes assigned to a single company can vary weekly.

Amazon managers, who work on site at delivery stations with drivers and their supervisors, have discretion over route assignments, sources said.

"We were walking on eggshells," said one courier-company owner. "You don't want to make the guy angry that gives out the routes because if you make him angry, he isn't going to give you the number of routes you want."

In some cases, this power dynamic led to free lunches, this person said.

"People were buying lunches for people at Amazon" to try and get more routes, this person said. "If you are in with Amazon, you can do no wrong. They will give more routes to those people."

Amazon can also cut routes from underperforming companies, according to former Amazon managers and courier company owners. Courier companies were in constant fear of losing routes or having their contracts cut, altogether.

"Amazon has all the power and delivery service providers are afraid to push back," the former Amazon logistics manager said. "I could make a decision that I wanted to replace a company on Friday, and on Monday, they would be out."

Another courier company manager, said, however, that the process to cut out a company can take up to a couple weeks.

Amazon's power extends to drivers

Drivers employed by third-party companies are also closely controlled by Amazon, according to interviews with courier company workers, Amazon employees, and legal filings.

Two Amazon managers said they had the power to indirectly fire drivers by banning them from their delivery stations. These bans typically happened at weekly meetings between Amazon managers and courier company managers, according to people who attended these meetings.

"I had drivers, grown men, coming up to me just crying with tears in their eyes saying, 'Please help me keep my job,'" a former Amazon manager said. "You've got to give them the line, 'You don't work for Amazon, you work of for the DSP, so I really can't help you.'

"The very next day I could be sitting in a meeting with the technical employer of that person ... saying he can't work out of this station."

This doesn't equate to a direct firing, he said, because drivers barred from an Amazon delivery station could technically work for another client at another site. This directive often ended in a firing, regardless, he said.

If Amazon fired a contracted driver outright, the company could be legally considered a joint employer. A joint employer could be held liable in court for alleged labor violations.

This is an important distinction. Attorneys representing Amazon-affiliated drivers across the US have argued in several lawsuits that Amazon should be considered a joint employer and therefore held liable for alleged labor violations such as missing wages, lack of overtime pay, and failure to provide breaks.

Amazon has been named as a defendant in at least six lawsuits against seven Amazon-affiliated contracted delivery companies in Pennsylvania, Illinois, California, Arizona, and Washington over the past three years. Three of the cases have been settled. Amazon did not admit fault in any of the cases.

"Amazon controls every every step in the delivery process except how workers are paid," said Sarah Schalman-Bergen of Berger & Montague, a Philadelphia-based firm that is representing drivers in a lawsuit against Amazon and TL Transportation. "It's a tremendous injustice."

If you're an Amazon insider with a story to share, email hpeterson@businessinsider.com.