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On the Clock is Motherboard’s reporting on the organized labor movement, gig work, automation, and the future of work.
In September, the owner of a small delivery company in Minnesota received an email from Amazon threatening to end its contract to deliver packages for the e-commerce giant. The email said that the company had not been keeping up with route quotas set by Amazon.
“Amazon hereby notifies your company that your company is in breach of certain requirements of the Program Agreement,” the email said. “If your company fails to cure the breach, Amazon may terminate the Program Agreement and end the business relationship between Amazon and your company.” (The “program agreement” is the contract Amazon keeps with its 2,000 third-party delivery companies nationwide.)
In order to resolve the breach, Amazon said the company needed to meet 100 percent of its route assignments for four consecutive weeks by December 16.
This news was a nightmare for the owner of the Amazon delivery company. In recent months, they’ve struggled to keep up with route quotas because of difficulties in hiring and retaining delivery drivers with the income they receive from Amazon amid a nationwide labor shortage, they said.
“Trying to hire right now in Minnesota is absolutely terrible,” the owner of the Amazon delivery company said. “Even Amazon can’t find people. We’re running as many routes as we’re capable of, but we can only run as many as we have employees.” The owner asked to remain anonymous because they feared retaliation from Amazon for speaking to the press.
Amazon delivery companies are legally independent from Amazon but if faced with trouble hiring, they can’t simply pay more—they receive a set amount of income from Amazon per delivery route, so they are functionally limited in what they can pay by what they are making from Amazon.
Across the country, the owners of Amazon delivery companies, known as delivery service partners, are struggling to hire workers and have recently received similar letters from Amazon with threats of termination. This news highlights how Amazon wields an incredible amount of power over its delivery companies who they claim are independent businesses. Delivery companies don’t have the ability to make their own business decisions, yet front their own capital and take on a huge amount of liability, while Amazon can cut them off at any moment. Motherboard obtained a nearly identical letter from another Amazon delivery company. Both letters obtained stated that the delivery companies had received “breach of contract” notifications because they had failed to complete 80 percent of the routes assigned to them by Amazon over a four week period in August and September.
Are you an Amazon employee or delivery service partner owner with a tip to share about Amazon? Please get in touch with the reporter, Lauren, via email@example.com or on Signal 201-897-2109.
We also spoke to four other Amazon delivery company owners in Oregon, Washington, Virginia, and Minnesota who said that Amazon has been threatening delivery companies in their regions with termination for not keeping pace with route quotas, which are difficult to meet because of the tight labor market.
“Amazon is using [these letters] as a ‘cover your ass’ to not renew [delivery service partners] that it doesn’t like,” an Amazon delivery company owner in Washington told Motherboard. “Amazon is trying to find a cause to terminate [them].”
Amazon is these delivery companies’ sole client, and a termination of the contract would effectively put them out of business. Amazon also stated in the email that it would place the companies in “poor” standing making them ineligible for bonuses until the “breach” was “cured.” Even if the breach was “cured,” Amazon said it would consider the “breach of contract” when determining whether to renew the delivery company’s contract in the future.
“I don’t have violations. I’m very diligent in how I run my business. I don’t just hire anyone off the street,” the owner in Minnesota continued. “Why am I being penalized? Because my outlook is quality over quantity?”
In response to a request for comment, Maria Boschetti, an Amazon spokesperson told Motherboard, “We offered to fact check the sources in Ms. Gurley’s article but she declined us the opportunity to do so. Unnamed sources make it difficult to validate the veracity of claims and don’t present a full or accurate picture.”
Boschetti told Motherboard that 3 percent of its delivery companies, roughly 3,450 delivery companies nationwide, do not consistently meet route expectations. Amazon delivery companies typically manage a fleet of anywhere from 20 to 40 routes a day.
“The assertion that we are “threatening to terminate” the contracts of Delivery Service Partners that are facing hiring challenges is simply untrue,” she continued. But the claim Motherboard is making is true, and is based on letters Amazon itself sent to companies that say they are struggling to hire workers.
“In fact, we have invested hundreds of millions of dollars this year alone to help DSPs around the country increase driver wages and offer financial incentives to attract drivers to their small businesses,” Boschetti continued. “When a DSP is not meeting the program’s expectations, we first work with them to provide additional support and only in the rare situation where they continue to consistently not meet expectations do we notify them of the risk to their program agreement. We’re proud to work with thousands of passionate and innovative entrepreneurs in our DSP program and are grateful for the positive impact they have on our communities and customers.”
Boschetti also offered Motherboard the opportunity to interview an Amazon delivery company owner handpicked by Amazon to get a different perspective. We asked to conduct the interview with the owner, Elizabeth Lopez, without an Amazon public relations representative present, but an Amazon representative insisted on listening in on the call the entire time. After the call, the PR team said it only needed to be on the call to monitor the video conferencing technology.
Asked about how her company dealt with the ongoing labor shortage, the business owner, Lopez, whose company is based out of an Amazon delivery station in Garner, North Carolina, told Motherboard, “The labor shortage has impacted us and the ability to hire new people. They don’t want to work. They have too much of an incentive to stay home,” she said.
Lopez said that in order to keep up with hiring, she frequently updates job postings on Indeed.com, maintains daily contact with drivers about their workplace concerns, and offers them advice when they’re having difficulties, work-related or personal.
“I would say this is the best opportunity I’ve ever had. It’s hard for me to say [why other companies are struggling], but it’s a hard job,” Lopez continued. “This is corporate America. [Amazon] has a plan in place. You can do it their way or not. That’s a choice. You just might not reap the benefits if you don’t.”
Across the country, large and small businesses, particularly in retail and service, have struggled to hire workers as the economy has reopened; some have dealt with this by raising wages and offering large sign-on bonuses. The delivery company owner in Minnesota told Motherboard that she can’t find enough drivers to work for $20.25 an hour, which is the rate that Amazon sets in her area.
Amazon too has dealt with its share of labor shortages. In recent months, Amazon has been raising wages across the country, raising average pay for warehouse workers to at least $18 and offering $3,000 sign-on bonuses, to attract new hires.
The level of scheduling control Amazon exerts over its delivery companies make it difficult for them to hire the right amount of drivers. Amazon typically notifies companies of their route commitments only a few days in advance and automatically accepts routes on behalf of delivery companies, denying them to submit route cancellations without being fined. Delivery companies told Motherboard that Amazon often switches routes the same day that companies are expected to run them.
“The route commitments ‘auto accept,’” a former Amazon delivery company owner who ended their contract with Amazon this summer told Motherboard. “There were times Amazon would demand I run an additional 15 to 20 more routes in very little time…. Finding not only drivers but the vehicles became nearly impossible.”
Some Amazon delivery companies spend hundreds of thousands of dollars on recruiters, onboarding specialists, and job listings on Indeed.com without reimbursement from Amazon.
“Everyone is quitting and Amazon sends us messages that say you’re not recruiting hard enough,” another Amazon delivery company owner in Minnesota who received a breach of contract letter in September for not running enough routes told Motherboard. “I pay for HR staff. I pay for an on-boarding specialist and recruiters. This year I’m negative $250,000.”
The owner of the delivery company in Minnesota told Motherboard that in recent weeks Amazon has ramped up her route commitments from 30 to 40 routes a week. “They keep bumping me up, raising my route commitments, when I’m trying to hire and resolve this issue,” they said.
Amazon launched the “delivery service partner program” in 2018 as an opportunity for entrepreneurs to start their own delivery businesses with as little as $10,000. The program allowed Amazon to reduce its dependence on UPS and the US Postal Service—which don’t deliver on Sundays— and speed up delivery times while reducing its liability for its delivery drivers.
Amazon’s controlling approach toward its delivery companies often translates into pressure on its delivery drivers. Motherboard has reported that Amazon delivery companies have pressured workers to forgo safety measures, skip breaks, and pee in bottles and bags to complete their routes on time, in turn putting the public at risk. This week, two delivery companies in Portland, Oregon, sued Amazon for, among other things, lying about wages and exposing drivers to injuries.
The owners of Amazon delivery companies say the most difficult part of the year still lies ahead. During ‘peak season,’ the period between Black Friday and Christmas, Amazon delivery companies are expected to rapidly ramp up their routes. “I have up to December 16 to cure the breach,” the delivery company owner in Minnesota said. “I’m working my tail off to do that.”