A driver's car waits to pick up goods for delivery. (Photo: Spark Driver site)
Walmart will pay $100 million to drivers who participated in one of its delivery programs after reaching a settlement Thursday with the Federal Trade Commission and 11 states, including North Carolina.
The settlement resolves a lawsuit against Walmart filed in Northern California District Court over Spark Driver, a program it has used since 2018 to deliver groceries and other merchandise using contracted drivers.
Walmart allegedly deceived its Spark drivers about base pay, incentives, and tips, frequently paying them less than offered at the start of orders and failing to provide drivers with full tips from customers or withholding them entirely. Walmart agreed to pay $79 million to its drivers, including roughly $2 million in North Carolina.
“Walmart frequently tells each Driver that they will receive the Customer’s full tip amount,” the FTC alleged in its complaint. “After the Drivers complete the work, however, Walmart divides the tip among all the delivering Drivers, resulting in Drivers receiving significantly less than the tip amount that Walmart represented.”
According to the complaint, Walmart also frequently reduced pay and tip amounts during the orders without informing drivers, or only informing them after the completion of the order. Despite this, the company allegedly maintained to customers that 100% of tips went to drivers and charged customers for tips that drivers did not receive.
Since the program’s inception in 2018, roughly a million drivers, working as independent contractors, have made 272 million deliveries nationwide through Spark Driver, according to a press release from North Carolina Attorney General Jeff Jackson.
“All told, Walmart’s practices have caused Drivers to lose millions of dollars that Walmart deceptively misrepresented Drivers would earn,” the FTC complaint reads.
Walmart will also pay $11 million to the states who participated in the lawsuit, including $1.4 million to North Carolina for attorneys’ fees and other legal expenses, and $10 million will be paid to the FTC to reimburse customers who were misled by the program.
“Labor markets cannot function efficiently without truthful and non-misleading information about earnings and other material terms,” said FTC Bureau of Consumer Protection director Christopher Mufarrige. “Today’s settlement reflects the Trump-Vance FTC’s focus on ensuring a healthy labor market for American workers, which is critical to the nation’s success.”
The settlement also requires Walmart to run an earning verification program and report annually to the FTC for the next decade to ensure compliance. And it is restricted from modifying the pay offered to drivers after an order has been accepted.
“Walmart misled its drivers and its customers so that the company could keep tips and other money that belonged to drivers,” said Jackson, one of 11 attorneys general who took part in the lawsuit. “I’m grateful for the federal government’s partnership on this case to make Walmart pay back millions for North Carolina drivers.”
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